In Perris, California, owners of ranches: “Another Skinny, Abandoned Horse Found in Inland Empire,” Los Angeles Times, September 16, 2011.
In Atlanta, the city’s outer suburban ring: “Real Estate Expert Dubs Area ‘Ring of Death,’” wsbtv.com, June 2, 2011.
In December 2011, one foreclosure “heat map”: Alexander Soule, “Feds Consider Changes for Seized Foreclosures,” Westchester County Business Journal, January 23, 2012.
The economist Edward Glaeser: Edward L. Glaeser, Harvard University and the National Bureau of Economic Research, “Rethinking the Federal Bias Toward Homeownership,” Cityscape: A Journal of Policy Development and Research 13, no. 2 (2011): 5–37. Also see “Ed Glaeser on Why Cities Matter,” video produced by CEOs for Cities, December 27, 2011. Glaeser points out that by pushing people toward single-family homes at the expense of higher-density types of living (since most single-family dwellings are owner-occupied while most multifamily dwellings are rented), the mortgage interest deduction encourages people to buy bigger homes, farther away from urban centers, which has a number of negative implications: it diminishes productivity; it increases commuting distances, energy expenses, and therefore level of damage to the environment; and, by increasing the physical distance between the rich and poor, Glaeser suggests it might also increase the social distance between them, reducing levels of empathy.

…

Across the nation, everything from store retail chains to sports stadiums to corporate headquarters to young families have been moving into cities and leaving the suburbs behind.
• • •
To see that cities are resurgent centers of wealth and culture, all you need to do is set foot in one. Or you can simply set foot in a bookstore. A litany of volumes have come out in the past few years praising cities and urbanism, titles like Richard Florida’s popular The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life and The Great Reset: How the Post-Crash Economy Will Change the Way We Live and Work; Aerotropolis: The Way We’ll Live Next by John Kasarda and Greg Lindsay; The Great Inversion and the Future of the American City by Alan Ehrenhalt; and Edward Glaeser’s love letter to cities, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier.

…

But the birth rate for this group is especially low; the 2011 figures showed birth rates for women ages twenty to twenty-four hit their lowest rate ever recorded, 85.3 per 1,000 people. Besides, no one is suggesting that this group is going to rush entirely to the center of big cities. The right urbanized suburbs will do the trick just fine for many in this generation. “We don’t hate the suburbs, we just hated to be bored—or boring,” says Gen Y expert Hira. Indeed, the economist Edward Glaeser points out that when it comes to the younger generation, there is little distinction between city and suburb if all needs and services are within walking distance. “If they can walk everywhere and there’s tons of stuff that they can walk to, then it’s a city.” Even, he says, if it happens to be an urbanized neighborhood in a suburb. The question is whether the boom in those walkable, urban-style developments in the suburbs will be enough.

Just look at jointly written academic papers: Gaspar and Glaeser, “Information Technology and the Future of Cities.”
Since the 1980s: Gaspar and Glaeser, “Information Technology and the Future of Cities.”
“She was dissatisfied”: Jane Jacobs, The Economy of Cities, p. 51.
The business guru Michael Porter: Michael Porter, “Clusters and the New Economics of Competition,” Harvard Business Review 76, no. 6 (November–December 1998): 77–90.
A group of four economists: Edward L. Glaeser, Hedi D. Kallal, Jose A. Scheinkman, and Andrei Shleifer, “Growth in Cities,” Journal of Political Economy 100, no. 6(December 1992): 1126–52.
Nor is this the only: Gianmarco Ottaviano and Giovanni Peri, “The Economic Value of Cultural Diversity: Evidence from US Cities,” NBER Working Paper 10904, November 2004, available at: ideas.repec.org/a/oup/jecgeo/v6y2006i1p9-44.html.

…

Whatever that is, it seems to be something that tends to be in greater supply the bigger a city gets. Ed Glaeser, the Harvard-based economist who specializes in the study of cities, crunched numbers from across the United States and found that Gross’s findings about New York apply to most large cities: While average earnings are higher in larger cities, the cost of living is higher yet. As a rule of thumb, each doubling of city size raises wages by 10 percent but raises prices by 16 percent.
So what is going on here? Why do people live in tiny apartments in places like Manhattan, panicking over mortgage payments or rent, when they could instead have a spacious home in Rock Island? They could sell up and move to a sprawling ranch out in the wilderness, or to a cheap city such as Detroit, where they could pick up a house for sixty thousand dollars.

Huber and Mark P. Mills. 2000. “How Cities Green the Planet.” City Journal (Winter) http://www.city-journal.org/html/10_1_how_cities.html.
50 Ed Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. Penguin Press, p. 201.
51 David Owen. 2009. “Is Locavorism Good for the Environment?” http://www.davidowen.net (September 9) www.davidowen.nethttp://www.davidowen.net/david_owen/2009/09/is-locavorism-good-for-the-environment.html.His more detailed argument can be found in David Owen. 2009. Green Cities. Why Living Smaller, Living Closer, and Driving Less are the Keys to Sustainability. Riverhead Books.
52 For a more detailed discussion of these issues, see Ed Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier.

…

Kautsky further observed that the individuals most likely to leave the countryside were “propertyless labourers, and of these the unmarried” and that it was “not simply the physically strongest, but also the most energetic and intelligent” that migrated (p. 224).
39 Mario Polèse. 2009. The Wealth and Poverty of Regions. Why Cities Matter. University of Chicago Press, p. 139. See also Edward Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. Penguin Press, p. 7.
40 Mario Polèse. 2009. The Wealth and Poverty of Regions. Why City Matters. University of Chicago Press, p. 140.
41 Edward Glaeser. 2011. Triumph of the City. How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier. Penguin Press, p. 70.
42 Ben Worthen. 2010. “A Dozen Eggs for $8? Michael Pollan Explains the Math of Buying Local.” Wall Street Journal (August 5) http://online.wsj.com/article/SB10001424052748704271804575405521469248574.html For another acknowledgement of this fact by an organic food supporter, see Jeffrey Kluger. 2010.

…

And yet, as observed by commentators whose basic argument parallels that of defenders of high-yield farming, thriving cities are not an environmental problem, but rather the best means to lighten up humanity’s impact on nature. To quote the applied scientists and policy analysts Peter W. Huber and Mark P. Mills, the skyscraper is “America’s great green gift to the planet” for it “packs more people onto less land, which leaves more wilderness undisturbed in other places, where the people aren’t. . . . The less real estate we occupy for economic gain,” they add, “the more we leave undisturbed as wilderness. And the city, though profligate in its consumption of most everything else, is very frugal with land. The one thing your average New Yorker does not occupy is 40 acres and a mule.”50 In the words of economist Edward L. Glaeser, “residing in a forest might seem to be a good way of showing one’s love of nature, but living in a concrete jungle is actually far more ecologically friendly . . .

“NYC Biking Is Up 14% from 2010; Overall Support Rises.” transportationnation.org, July 28, 2011.
Berreby, David. “Engineering Terror.” The New York Times, September 10, 2010.
Betz, Eric. “The First Nationwide Count of Parking Spaces Demonstrates Their Environmental Cost.” The Knoxville News Sentinel, December 1, 2010.
Branyan, George. “What Is an LPI? A Head Start for Pedestrians.” ddotdish.com, December 1, 2010.
Brooks, David. “The Splendor of Cities.” Review of Triumph of the City by Edward L. Glaeser (New York: Penguin, 2011). The New York Times, February 7, 2011.
Brunick, Nicholas. “The Impact of Inclusionary Zoning on Development.” Report of Business and Professional People for the Public Interest, bpichicago.org, 2004, 4.
Buiso, Gary. “Marty’s Lane Pain Is Fodder for His Christmas Card.” The Brooklyn Paper, December 12, 2010.
_____. “Safety First! Prospect Park West Bike Lane Working.”

…

This has certainly been the case in San Francisco, where headhunters for companies like Yelp and Zynga (the social-gaming developers who created FarmVille) actively use urbanism as a recruiting tool. “We’re able to attract creative and tech talent because we are in the city,” acknowledges Colleen McCreary, Zynga’s head of human resources.31
Ultimately, though, it would seem that urban productivity has even deeper causes. There is mounting evidence that dense, walkable cities generate wealth by sheer virtue of the propinquity that they offer. This is a concept that is both stunningly obvious—cities exist, after all, because people benefit from coming together—and tantalizingly challenging to prove.● This hasn’t kept it from the lips of some of our leading thinkers, including Stewart Brand, Edward Glaeser, David Brooks, and Malcolm Gladwell.
Speaking at the Aspen Institute, David Brooks pointed out how most U.S. patent applications, when they list similar patents that influenced them, point to other innovators located less than twenty-five miles away.

Robinson, “Finding Eldorado: Slavery and Long-Run Development in Colombia,” NBER working paper, June 2012.
75 THE SALT-SENSITIVITY THEORY OF AFRICAN-AMERICAN HYPERTENSION: This section is based on author interview with Roland Fryer as reflected in Stephen J. Dubner, “Toward a Unified Theory of Black America,” New York Times Magazine, March 20, 2005. We are also grateful for the excellent article by Mark Warren in Esquire, “Roland Fryer’s Big Ideas” (December 2005). See also: David M. Cutler, Roland G. Fryer Jr., and Edward L. Glaeser, “Racial Differences in Life Expectancy: The Impact of Salt, Slavery, and Selection,” unpublished manuscript, Harvard University and NBER, March 1, 2005; and Katherine M. Barghaus, David M. Cutler, Roland G. Fryer Jr., and Edward L. Glaeser, “An Empirical Examination of Racial Differences in Health,” unpublished manuscript, Harvard University, University of Pennsylvania, and NBER, November 2008. For further background, see: Gary Taubes, “Salt, We Misjudged You,” The New York Times, June 3, 2012; Nicholas Bakalar, “Patterns: Less Salt Isn’t Always Better for the Heart,” The New York Times, November 29, 2011; Martin J.

…

Lyons, A Treatise on Electromagnetic Phenomena and on the Compass and Its Deviations Aboard Ship, Vol. 2 (John Wiley & Sons, 1903). Thanks to Jonathan Rosen for pointing out this idea.
32 CONSIDER A PROBLEM LIKE SUICIDE: For a fuller treatment of this topic, see Stephen J. Dubner, “The Suicide Paradox,” Freakonomics Radio, August 31, 2011. We are particularly indebted to the broad and deep research of David Lester, as well as multiple interviews with him. We also relied heavily on David M. Cutler, Edward L. Glaeser, and Karen E. Norberg, “Explaining the Rise in Youth Suicide,” from Jonathan Gruber (editor), Risky Behavior Among Youths: An Economic Analysis (University of Chicago Press, 2001). Various reports from the Centers for Disease Control and Prevention and the National Vital Statistics System were very helpful; see also Robert E. McKeown, Steven P. Cuffe, and Richard M. Schulz, “U.S. Suicide Rates by Age Group, 1970–2002: An Examination of Recent Trends,” American Journal of Public Health 96, no. 10 (October 2006).

., “To: Detroit, From: Pittsburgh,” Washington Post, March 22, 2009, retrieved from www.washingtonpost.com/wp-dyn/content/article/2009/03/12/AR2009031202480.html.
19. Belinda Lanks, “The Incredible Shrinking City,” Metropolis, April 17, 2006.
20. Tom Leonard, “US Cities May Have to Be Bulldozed to Survive,” Telegraph, June 12, 2009. Also see Edward L. Glaeser, “Bulldozing America’s Shrinking Cities,” New York Times, June 16, 2009, retrieved from http://economix.blogs.nytimes.com/2009/06/16/bulldozing-americas-shrinking-cities.
21. For a history of planned shrinkage and benign neglect, see Deborah Wallace, A Plague on Your Houses (London: Verso, 2001).
22. My team and I have conducted a wide variety of research on this point. For our city and regional findings, see my “Worsening Unemployment,” Atlantic, July 3, 2009; “Unemployment’s Geography,” Atlantic, June 5, 2009.

…

Richard Florida, Who’s Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life (New York: Basic Books, 2008).
5. Richard Florida, Who’s Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life, Canadian edition (Toronto: Random House Canada, 2008).
6. Kelly Evans, “Why College Towns Are Looking Smart,” Wall Street Journal, March 24, 2009.
7. I provide figures on these trends in Richard Florida, “Town, Gown, and Unemployment,” Atlantic, May 20, 2009, retrieved from http://correspondents.theatlantic.com/ richard_florida/2009/05.
8. Edward L. Glaeser, “How Some Places Fare Better in Hard Times,” New York Times, March 24, 2009.
Chapter 12: Death and Life of Great Industrial Cities
1. Robert Pirsig’s classic Zen and the Art of Motorcycle Maintenance: An Inquiry into Values (New York: HarperPerennial Modern Classics, 2008); Matthew Crawford, Shop Class as Soulcraft: An Inquiry into the Value of Work (New York: Penguin Press, 2008); Richard Sennett, The Craftsman (New Haven, Conn.: Yale University Press, 2008).
2.

…

., The Brookings Institution, December 2009.
12. Edward L. Glaeser, “How Some Places Fare Better in Hard Times,” New York Times Economic blog, March 24, 2009, retrieved from http://economix.blogs.nytimes.com/2009/03/24/how-some-places-fare-better-in-hard-times.
13. The one other type of place that my research shows does well with this demographic is great college towns near the heart of megaregions such as Austin, part of the Dal-Austin megaregion; Boulder, part of the Denver-Boulder megaregion; and Raleigh-Durham in Char-lanta. Andrew Strieber, “Starting Out: The 10 Most-Popular Cities for First-Time Job-Seekers,” Careercast.com, May 2009, retrieved from www.careercast.com/jobs/content/ten-best-cities-college-graduates-jobs-rated; Florida, Who’s Your City?
14. Roughly between eighteen and twenty-nine years of age at the time the survey was carried out.

The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy
by
Bruce Katz,
Jennifer Bradley

Wheeler, “Cities and the Growth of Wages among Young
Workers: Evidence from the NLSY,” Working Paper 2005-055A (St. Louis, Mo.:
Federal Reserve Bank, 2005). Edward Glaeser and David Maré discovered that
workers in large metro areas eventually accrued a 33 percent wage premium, which
stayed with them even after they left the metro, indicating that being in the metro
mix with other skilled people makes individuals more productive. Edward L. Glaeser and David C. Maré, “Cities and Skills,” Journal of Labor Economics 19 no. 2
(2001).
58. See Steven Johnson, Where Good Ideas Come From: The Natural History of
Innovation (New York: Penguin Group, 2010), pp. 9–10.
59. “Our evidence thus reinforces the view that policy action should focus on
building upon pre-existing comparative advantage.” Delgado, Porter, and Stern,
“Clusters, Convergence, and Economic Performance,” p. 6.
60. Richard Pérez-Peña, “Two Top Suitors Are Emerging for New Graduate
School of Engineering,” New York Times, October 16, 2011.
61.

…

Shifting to new energy
sources will affect the source of our energy, the cars we drive, the products
we buy, the kinds of homes we live in, the shape and location of our communities, and the way we get from one place to another.39 This shift will
also drive job creation, as the nation will need scientists to invent, entrepreneurs to take to market, and workers to build solar panels, wind turbines,
biomass plants, advanced fuel cells, and other energy-efficient products.
Cities and metropolitan areas in the United States are well positioned
to continue to be at the center of the nation’s clean economy. Although
the densest parts of metropolitan areas (typically, central cities) are
thought of as dirty, congested, and polluted, their environmental impact
per capita is in fact fairly modest.40 As economist Ed Glaeser has written,
“If the future is going to be greener, then it must be more urban. Dense
cities offer a means of living that involves less driving and smaller homes
to heat and cool. Maybe someday we’ll be able to drive and cool our
homes with almost no carbon emissions, but until then, there is nothing
greener than blacktop.”
But cities and metros are also leading the way on the production side
of critical sectors of the low-carbon economy.

See his ‘Figures of Destructuration: Terrorism, Architecture, Social Form’, November 2009, available at bratton.info.
67Ibid.
68Darton, ‘Janus Face of Architectural Terrorism’.
69It must be stressed here that there is no evidence that Atta and his colleagues had any way of predicting, let alone planning, the final collapse of the buildings once they had been struck by the two aircraft.
8. Housing: Luxified Skies
1Edward Glaeser, ‘How Skyscrapers Can Save the City’, Atlantic, March 2011. See also his Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier, New York: Penguin, 2012.
2Ibid.
3See Richard Florida, ‘The Rise of the Creative Class’, Washington Monthly 34:5, 2002, pp. 15–25.
4Jamie Peck, ‘Edward Glaeser’s City: A Triumph of Economism’, unpublished paper, 2014.
5Glaeser is affiliated with the neoconservative Manhattan Institute, which was a key intellectual player behind George W. Bush’s two presidential tenancies. See Jamie Peck, ‘Economic Rationality Meets Celebrity Urbanology: Exploring Edward Glaeser’s City’, International Journal of Urban and Regional Research, 2016 (forthcoming).
6Paul Goldberger, ‘Too Rich, Too Thin, Too Tall, Vanity Fair, May 2014.
7As well as blocking out light, new towers often create wind systems at ground level that can be uncomfortable and even dangerous to those on the street.
8Lloyd Alter, ‘It’s Time to Dump the Tired Argument That Density and Height Are Green and Sustainable’, Treehugger, 3 January 2014, available at treehugger.com.
9Ibid.
10Samuel Zipp ‘The Roots and Routes of Urban Renewal’, Journal of Urban History 39:3, May 2013, p. 372.
11Walter Gropius, The New Architecture and the Bauhaus, Cambridge, MA: MIT Press, 1965, p. 146.
12Paul Christoph Haacke, ‘The Vertical Turn: Topographies of Metropolitan Modernism’, PhD thesis, University of California, Berkeley, 2011, available at escholarship.org/uc/item/1857736f.
13Fosco Lucarelli and Mariabruna Fabrizi, ‘The Trellick Tower: The Fall and Rise of a Modern Monument’, San Rocco Magazine 5, Fall 2012.
14Sigfried Giedeon, Building in France, Building in Iron, Building in Ferroconcrete, Santa Monica, CA: Getty Center for the History of Art and the Humanities, 1995 [1928].
15Le Corbusier, The City of Tomorrow and Its Planning, New York: Dover, 1987 [1927], p. 280.
16This term comes from the US Citizens Housing Council, 1940.

…

With urban populations mushrooming and 75 per cent of the world’s population of 11 billion likely to be living in cities by 2050, the stacking of housing will inevitably, as Ed Glaeser argues, be a crucial factor in the future of humanity.
Equally clearly, the sprouting of towers for the super-rich that in many cities now constitutes de facto housing policy is a social catastrophe in the making. The parallel transformation of cities discussed here is the material and often dystopian embodiment of the ways in which the current neoliberal version of capitalism continues to concentrate ever more extreme amounts of wealth and resources into the hands of the very few, to be used to sustain speculative dynamics that accentuate this wealth further while severely damaging the lives and life chances of everyone else.
Far from unleashing market forces to build up cities in ways that provide affordable housing for all – as in Ed Glaeser’s initially seductive vision – such processes of neoliberalisation are merely allowing cities to be reconstructed into forests of super-tall cocoons, owned and controlled by the super-rich, who might occasionally deign to occasionally even inhabit the structures.

…

‘Rising toward the stratosphere’, Darton writes, ‘we feel we have broken free of gravity. When that illusion possesses us, it is not long before our ascent finds its opposite number in the terror of the fall.’
8.
Housing: Luxified Skies
Building Up to ‘Save’ the City?
In March 2011, Harvard economics professor Edward Glaeser wrote a manifesto for the building of vertical cities in the Atlantic magazine.1 Arguably the world’s most influential urban economist, Glaeser playfully invoked the Book of Genesis, citing the builders of the legendary Tower of Babel when they declared, ‘Come, let us build us a city and a tower with its top in the heavens. And let us make a name for ourselves, lest we be scattered upon the face of the whole earth.’
To Glaeser, there is a simple solution to the contemporary impasse combining extraordinary rates of urbanisation, rapid population growth, a predilection for conserving large swathes of older, lower housing stock and crises in the supply of affordable urban housing.

There were fewer weak ties.44
Cities Come Back—with Weak Ties
After the disastrous 1970s, when the future of cities seemed bleak, people returned. In the 1980s, housing prices began to rise in the same cities that had experienced drops in the previous decade. New York City gained population. Personal income in cities increased, too, reversing declines in the 1970s. Not all cities added people and income. Edward Glaeser discovered that there was a complete switch in the types of cities that grew. In 1950, seven of the eight largest cities had a higher percentage of people employed in manufacturing than the nation as a whole. By 1990, six of the eight largest cities had proportionally less manufacturing than the country as a whole. The urban revival wasn't led by places that made things, but by cities that produced ideas.

At a broad level, the differences between countries with similar average levels of GDP per head and similar economic structures means that actual measured inequality must result from differences in the ways their labor markets and tax and welfare systems operate. These economic institutions clearly embed social and political attitudes. And it has been frequently noted and confirmed that the United States does have a different culture of money making and an admiration for financial success. For example, Alberto Alesina and Edward Glaeser set out convincing evidence on different attitudes to inequality in the United States and Europe.25
Figure 8. America has once before seen today’s extreme inequality.
Krugman’s point was that the recent increase in inequality went well beyond the traditional spirit of can-do and aspiration in America. He argues that partisan political choices have contributed substantially to the massive enrichment of the rich, including tax reductions on capital gains and legacies.26 In addition—and I think this is more interesting in terms of the long-term trends—he has argued that social norms, the unspoken agreement in society about what is acceptable, have shifted toward acceptance of excessive reward for the few and a tolerance of the extremes of poverty and wealth.

Quoted in Eric Lipton and Raymond Hernandez, “A Champion of Wall Street Reaps Benefits,” The New York Times, December 13, 2008, available at http://www.nytimes.com/2008/12/14/business/14schumer.html.
58. U.S. Census Bureau, Housing Vacancies and Homeownership, Table 14, available at http://www.census.gov/hhes/www/housing/hvs/historic/index.html.
59. Edward L. Glaeser and Jesse M. Shapiro, “The Benefits of the Home Mortgage Interest Deduction,” Tax Policy and the Economy 17 (2003): 37–82, available at http://www.jstor.org/stable/20140504.
60. Edward L. Glaeser, “Attack of the Home Buyers’ Tax Credit,” Economix Blog, The New York Times, November 10, 2009, available at http://economix.blogs.nytimes.com/2009/11/10/attack-of-the-home-buyers-tax-credit/. The paper he cites is Denise DiPasquale and Edward L. Glaeser, “Incentives and Social Capital: Are Homeowners Better Citizens?” (NBER Working Paper 6363, January 1998), available at http://www.nber.org/papers/w6363.pdf; compare Tables 2 and 4.
61.

…

This ethos may have something to do with the important place of independence and self-reliance in the constellation of American values. Or it may be the product of various government policies designed to encourage homeownership. There may also be an element of truth to this idea; homeownership is generally thought to create positive externalities, since homeowners are on average more likely to devote effort to improving their communities. After reviewing other empirical studies and doing their own analyses, Edward Glaeser and Jesse Shapiro conclude:
[T]here is a limited body of evidence suggesting that homeownership creates positive spillovers for near neighbors. Homeowners do appear to be more active citizens. They vote more. They take better care of their homes. Houses that are surrounded by homeowners are worth a little more than houses that are surrounded by renters.59
However, much of the positive effect of homeownership is due not to ownership itself, but to other factors that differentiate owners and renters.

…

The Center for Responsible Lending found that subprime borrowers ended up paying the equivalent of 1.3 percentage points of interest more for loans obtained through mortgage brokers than they would have paid borrowing directly from a retail lender.19 The city of Baltimore sued Wells Fargo, alleging that the company systematically targeted minority borrowers through such policies as offering bonuses for steering borrowers who would have qualified for prime loans into subprime loans instead.20 According to Shaun Donovan, secretary of housing and urban development, 33 percent of subprime mortgages in New York City went to borrowers who could have qualified for conventional loans.21 These examples demonstrate that unscrupulous brokers and lenders, armed with dense fine print, can induce consumers to choose products that are not in their best interest.

Gaither, and Eric Schulman, “The Price and Purity of Illicit Drugs: 1981-2007,” Institute for Defense Analysis for the Office of National Drug Control Policy (http://www.whitehousedrugpolicy.gov/publications/price_purity/price_purity07.pdf. , accessed 08/08/2010). The analysis relating gas prices and housing draws from Edward L. Glaeser and Matthew E. Kahn, “Sprawl and Urban Growth,” NBER Working Paper, May 2003; and Census Bureau, American Housing Survey of the United States, 2007 and 1997 editions (found at http://www.census.gov/hhes/www/housing/ahs/nationaldata.html, accessed 08/13/2010). The comparison of urban patterns in Moscow with those of other cities draws from Alain Bertaud and Renaud Bertrand, “Cities Without Land Markets, Location and Land Use in the Socialist City,” the World Bank, Policy Research Working Paper 477, June 1995, in Journal of Urban Economics, Vol. 41, No. 1, January 1997, pp. 137-151.
11-12 When Prices Misfire: The anecdote about incentives and births in Australia comes from Joshua Gans and Andrew Leigh, “Born on the First of July: An (Un)natural Experiment in Birth Timing,” Journal of Public Economics, Vol. 93, 2009.

…

,” New York Times, February 14, 2000; and Dan Hammermesh, “Time to Eat: Household Production Under Increasing Income Inequality,” American Journal of Agricultural Economics, Vol. 89, No. 4, November 2007, pp. 852-863.
77-78 La Joie de Vivre: The impact of higher taxes and stronger unions on working hours in Europe is discussed in Edward Prescott, “Why Do Americans Work So Much More Than Europeans?,” Federal Reserve Bank of Minneapolis Quarterly Review, Vol. 28, No. 1, July 2004, pp. 2-13; Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, “Work and Leisure in the U.S. and Europe: Why So Different?” NBER Working Paper, April 2005; and Olivier Blanchard, “The Many Dimensions of Work, Leisure, and Employment: Thoughts at the End of the Conference,” comments on papers presented at the Rodolfo DeBenedetti conference on “Are Europeans Lazy, or Are Americans Crazy?” Portovenere, Italy, June 2006. Data on the impact of time use on happiness is from Ronald Inglehart, Roberto Foa, and Christian Welzel, “Social Change, Freedom and Rising Happiness,” Journal of Personality and Social Psychology, Internet Appendix (at www.worldvaluessurvey.org/wvs/articles/folder_published/article_base_106/files/trends.doc, accessed 08/16/2010); “Measuring Leisure in OECD Countries,” in Organisation for Economic Co-operation and Development, op. cit.; and Alan Krueger, Daniel Kahneman, David Schkade, Norbert Schwarz, and Arthur Stone, “National Time Accounting: The Currency of Life,” Princeton University Department of Economics Working Paper, March 2008.
79-86 The Price of Women: Data on the popularity of polygamy through history found in Walter Scheidel, “Monogamy and Polygamy in Greece, Rome, and World History,” Princeton/Stanford Working Papers in Classics, June 2008; Theodore Bergstrom, “Economics in a Family Way,” Journal of Economic Literature, Vol. 34, 1996, pp. 1903-1934; and Gary Becker, A Treatise on the Family , enlarged edition (Cambridge, Mass.: Harvard University Press, 1993), p. 81.

…

NBER Working Paper, May 2005; and Timothy Brown, “A Monetary Valuation of Individual Religious Behavior: The Case of Prayer,” University of California Berkeley Working Paper, September 2009. The relation between religious attitudes and people’s opportunities in the secular world is discussed in Jonathan Gruber and Daniel Hungerman, “The Church vs. the Mall: What Happens When Religion Faces Increased Secular Competition?” NBER Working Paper, July 2006; Jonathan Gruber, “Pay or Pray? The Impact of Charitable Subsidies on Religious Attendance,” NBER Working Paper, March 2004; and Edward Glaeser and Bruce Sacerdote, “Education and Religion,” NBER Working Paper, 2001.
185-188 What Does It Cost?: Maimonides’ comment on circumcision is found in Moses Maimonides, The Guide for the Perplexed, translated from the original Arabic text by M. Friedlander, 2nd edition (Charleston, S.C.: Forgottenbooks. com, 2008), pp. 646-647. The description of the mystic religion of Pythagoras is in Bertrand Russell, A History of Western Philosophy (London: Routledge, 1991), p. 51.

Firms have responded to the threat of Chinese imports by increasing their productivity through adopting better information technology, higher spending on R&D and increased patenting.597 So opening up the economy and boosting competition more generally are vital for innovation and growth in Europe.
Wherever the demand for innovation comes from, it tends to be supplied in cities. Jane Jacobs, a great American urbanist, pointed this out in the 1960s.598 More recent research by Ed Glaeser of Harvard University documents this. In his masterful Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier, he explains how most innovation takes place in diverse, densely populated cities, where people are forever interacting with each other and experiencing new things.599 “We are a social species and we learn by being around clever people,” he observes.600 “Cities have long sped this flow of ideas. Eighteenth-century Birmingham saw textile innovators borrow each other’s insights – and gave us the industrial revolution… Physical proximity allows the free flow of goods, services and ideas – and this powers the collaboration that creates everything from Ford’s Model T to Facebook, and economic growth too.”

Isolating yourself makes you less influential: one study finds that when a prominent researcher moves to another city, their patents are less likely to be cited by peers in their previous city.603 Moreover, innovation today often requires an ever-larger crowd of experts, preferably working nearby. Benjamin Jones of Northwestern University finds that it takes ever more people to produce new research, a trend he attributes to the increasing “burden of knowledge” associated with rising technological complexity and an expanding knowledge base.604
One reason why Europe is not as innovative as America – in particular, why it has nowhere that rivals Silicon Valley – is that its digital innovators are spread across many locations, where there is not a dense enough network to produce as many new ideas. Ed Glaeser and Matthew Resseger of Harvard University find that in highly skilled areas, city size explains 45 per cent of the variation in worker productivity.605 It’s not just that smart workers choose to live in bigger cities.

Or to put it differently, where will the industrial zones for this type of “industrial” activity be?
Cities as Twenty-First-Century “Factories”
According to Harvard economist Ed Glaeser, talented people gather in cities because this makes them more productive. What this means for rich-nation competitiveness policy is straightforward. Human capital and cities are likely to be the foundations of the twenty-first-century landscape of work. Cities are where people meet and form local networks for face-to-face connections and exchanges. They are where people exchange ideas and where competition among ideas plays out. Cities are where most new technologies develop and start-ups flourish.
Cities also optimize the matching between workers and firms and between suppliers and customers. In this sense, cities become skill-clusters—or “brain hubs” as Enrico Moretti calls them.

…

Specifically, the technicalities involved in integrating the Krugman-Venables logic with the Grossman-Helpman logic were first worked out in a paper on the geography of growth takeoffs that I wrote with Philippe Martin from the Paris School of Economics and Gianmarco Ottaviano from the London School of Economics (Richard Baldwin, Philippe Martin, and Gianmarco Ottaviano, “Global Income Divergence, Trade, and Industrialization: The Geography of Growth TakeOffs,” Journal of Economic Growth 6, no. 1 [2001]: 5–37).
3. Edward L. Glaeser, “Why Has Globalization Led to Bigger Cities?” Economix (blog), New York Times, May 19, 2009, http://economix.blogs.nytimes.com/2009/05/19/why-has-globalization-led-to-bigger-cities/?_r=0.
8. RETHINKING G7 GLOBALIZATION POLICIES
1. Reported in Pew Research Center article, “Faith and Skepticism about Trade, Foreign Investment,” September 16, 2014, based a poll of forty-four nations, http://www.pewglobal.org/2014/09/16/faith-and-skepticism-about-trade-foreign-investment/.
2.

…

As numerically minded readers will have already understood, it was exactly this growth gap—plus the inescapable implication of growth compounding—that put the “great” into the Great Divergence after just a few decades.
Urbanization
The only fact of the first unbundling that is left unaccounted for concerns urbanization. Urban economics has many explanations for the close association between globalization’s first unbundling and rising city size. Among the most compelling is Ed Glaeser’s simple assertion that cities are a way of economizing on communication costs. Cities are where people meet and exchange ideas.
As Glaeser put it in a 2009 Economix blog post: “Globalization and technological change have increased the returns to being smart; human beings are a social species that get smart by hanging around smart people. A programmer could work in the foothills of the Himalayas, but that programmer wouldn’t learn much.

However, the eﬀect of an unusually large percentage of young males in the population may be mitigated because those most vulnerable to crime may be more likely to take
actions to protect themselves. Depending upon how responsive victims are to these threats,
the coeﬃcient for a variable like the percent of young males in the population could be zero
even when the group in question poses a large criminal threat.
23. Edward L. Glaeser and Bruce Sacerdote, “Why Is There More Crime in Cities?” Harvard University working paper, Nov. 14, 1995.
24. For a discussion of the relationship between income and crime, see John R. Lott, Jr.,
“A Transaction-Costs Explanation for Why the Poor Are More Likely to Commit Crime”
Journal of Legal Studies 19 (Jan. 1990): 243–45.
25. A brief survey of the laws, excluding the changes in the rules regarding permits, reveals the following: Alabama made no significant changes in these laws during the period.

…

What makes these graphs particularly surprising is that a gun ban
should, everything else equal, actually cause nongun suicides to rise simply
because at least some (if not all) of those who would use guns to commit
suicide would use some other way of doing so. After all, the ultimate public
policy goal would seem to be to reduce overall suicides and not just one
method of committing suicide.
Yet even more perverse results have been obtained. David Cutler, Edward Glaeser, and Karen Norberg have conducted by far the largest study
on what factors are related to suicides by juveniles.165 They find some evidence of a relationship between higher gun ownership and suicide, but that
relationship not only disappears but is in fact reversed when they include
a variable for the rate at which people go hunting. The higher suicide rate
is in fact related to the higher rates at which people in certain counties
go hunting, not whether people own a gun.

…

That research provides
extremely strong evidence that these questions were answered consistently between 1988
and 1996. See John R. Lott, Jr. and Larry W. Kenny, “How Dramatically Did Women’s Suﬀrage
Change the Size and Scope of Government?” University of Chicago School of Law working
paper (1997). The relative diﬀerences in gun ownership across groups is also consistent with
recent work using other polls by Edward Glaeser and Spencer Glendon, “Who Owns Guns?”
American Economic Review 88 (May 1998).
The empirical work that will be done later will allow us to adjust for the changes in the
reported level of gun ownership that might result from the change in this question.
6. I appreciate Tom Smith’s taking the time to talk to me about these issues on May 30,
1997.
7. Gun owners within each of the twenty-four categories listed in note 2 above may have
particular characteristics that cause them to vote at rates that diﬀer from the rates at which
other people vote.

When the towers fell [on September 11, 2001], I found myself talking to more neighbors in the days after 9/11 than ever before.”22
Meetup’s appeal is a powerful reminder that bringing people together for social interaction is the true killer app for smart cities. But we are merely writing the latest chapter in thousands of years of urban evolution—the purpose of cities has always been to facilitate human gatherings. While we celebrate their diversity, as economists such as Harvard University’s Ed Glaeser argue, cities are actually social search engines that help like-minded people find each other and do stuff. “People who live in cities can connect with a broader range of friends whose interests are well matched with their own,” he argues in his 2010 book Triumph of the City.23 The big buildings we associate with urbanity are merely the support system that facilitates all of those exchanges. As Geoffrey West, a physicist who studies how cities grow, explains, “Cities are the result of clustering of interactions of social networks.”24 And they are repositories of the civilization and culture that grow from these dealings.

To avoid irreversible climate change, the International Energy Agency estimates that we need to stabilize the concentration of carbon dioxide in the atmosphere below 450 parts per million. At current rates of greenhouse-gas emission, the point of no return will arrive sometime around 2017. After that, global warming of more than 2 degrees Celsius can still be avoided, but it will cost four to five times as much as we extensively retrofit old, inefficient power plants and infrastructure.75
Economist Edward Glaeser of Harvard University sees cities as green alternatives to help stabilize emissions. That makes sense in America, where higher population density would dramatically slash the energy we waste through sprawl. Residents of transit-dependent Manhattan have the lowest per capita carbon output of any American community, argues David Owen in Green Metropolis. But for the newly emerging global middle class, even a Manhattan lifestyle represents an enormous increase in energy consumption.

Other works by University of North Carolina professors during Kasarda’s time as a Ph.D. student include Gerhard Lenski’s Human Societies and Power and Privilege, and Hubert M. Blalock’s Causal Inferences in Nonexperimental Research.
The interview with Amos Hawley was conducted at his home in March 2008. He died August 31, 2009. Marshall McLuhan’s quote is taken from the first chapter of Understanding Media. The Ed Glaeser reference is to the working paper “Did the Death of Distance Hurt Detroit and Help New York?” by Edward L. Glaeser and Giacomo A. M. Ponzetto. Jane Jacobs’s recollection of Scranton and Wilkes-Barre is taken from Cities and the Wealth of Nations.
Raymond Vernon introduced the product cycle in “International Investment and International Trade in the Product Cycle.” Vernon’s quotes are taken from the essay “Economic Sovereignty at Bay” (Foreign Affairs, October 1968). The line “Democracy sacrifices efficiency” appeared in the story “China’s Infrastructure Splurge” (The Economist, February 14, 2008).

…

They especially favored cities where there was multimodality,” the more forms of transport the better.
“Those businesses generate external economies that attract firms which serve or supply them,” like Las Colinas or Louisville’s satellites. “The growing concentration often triggers further improvements in transportation infrastructure—new highways, rail lines, air service—making them even more attractive. And the process reinforces itself,” until these hubs achieve critical mass, as Babylon, Byzantium, Venice, and New Orleans once did.
But hubs are also vulnerable to the vicissitudes of new technology. Each of these cities was supplanted by younger rivals as caravans gave way to caravels, clipper ships, and eventually Pan Am Clippers. The Harvard economist Edward Glaeser has documented how the advent of the automobile (and of long-distance trucking) canceled out the geographic advantages of waterfront cities such as Buffalo, Detroit, and Cleveland.

…

In Amsterdam, home to the world’s first aerotropolis-by-design, Dutch planners have a saying:
The airport leaves the city.
The city follows the airport.
The airport becomes a city.
Although Kasarda’s models are more elaborate, the fact remains: the aerotropolis is a city with a center. As such, it represents a return to the way our cities were built and how they produced some of our greatest monuments. We have not built high-rise cities in Manhattan’s mold since the turn of the previous century, when the owners of the New York Central railroad oversaw the construction of a shining “Terminal City” above Grand Central’s tracks buried beneath Park Avenue—thirty square blocks of midtown Manhattan and some of the most prestigious real estate in the world. Cities since then have followed the galactic model of greater Los Angeles and its sclerotic freeways.

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The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class?and What We Can Do About It
by
Richard Florida

The person who first identified this development is my University of Toronto colleague J. David Hulchanski, in “The Three Cities Within Toronto: Income Polarization Among Toronto’s Neighborhoods, 1970–2005,” Cities Centre, University of Toronto, 2010, www.urbancentre.utoronto.ca/pdfs/curp/tnrn/Three-Cities-Within-Toronto-2010-Final.pdf. See also Richard Florida, “No Longer One Toronto,” Globe and Mail, October 22, 2010, www.theglobeandmail.com/opinion/no-longer-one-toronto/article4329894.
CHAPTER 1: THE URBAN CONTRADICTION
1. The urban optimists include Harvard University’s Edward Glaeser, Bruce Katz of the Brookings Institution, and the political theorist Benjamin Barber. See Edward Glaeser, The Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin, 2011); Bruce Katz and Jennifer Bradley, The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy (Washington, DC: Brookings Institution Press, 2013); Benjamin Barber, If Mayors Ruled the World: Dysfunctional Nations, Rising Cities (New Haven, CT: Yale University Press, 2013).
2.

…

Zillow Blog, December 30, 2015, www.zillow.com/research/total-housing-value-2015-11535.
17. Gyourko, Mayer, and Sinai, “Superstar Cities.”
18. These data are from Anna Scherbina and Jason Barr, “Manhattan Real Estate: What’s Next,” Real Clear Markets, February 8, 2016, www.realclearmarkets.com/articles/2016/02/08/manhattan_real_estate_whats_next_101995.html.
19. The term NIMBY grew in use in the United States in the 1980s, but some date its origin as far back as the 1950s. See Michael Dear, “Understanding and Overcoming the NIMBY Syndrome,” Journal of the American Planning Association 58, no. 3 (1992): 288–300. There is a rapidly expanding literature on the effects of NIMBYism and land use restrictions on housing costs and urban development. See, Edward Glaeser, The Triumph of the City (New York: Penguin, 2011); Ryan Avent, The Gated City (Seattle: Amazon Digital Services, 2014); Ryan Avent, “One Path to Better Jobs: More Density in Cities,” New York Times, September 3, 2011, www.nytimes.com/2011/09/04/opinion/sunday/one-path-to-better-jobs-more-density-in-cities.html; Matthew Yglesias, The Rent Is Too Damn High (New York: Simon and Schuster, 2012); Matthew Yglesias, “NIMBYs Are Killing the National Economy,” Vox, April 25, 2014, www.vox.com/2014/4/25/5650816/NIMBYs-are-killing-the-national-economy.

The authors attribute this growing gap to increased returns to talent and experience in large cities. Whatever a the level of schooling, an experienced, talented worker gets a far greater return for his ability in large cities than in small cities, and this effect has grown steadily in recent decades.[5]
A crucial question is just why these changes have taken place. Both the timing and the nature of the shift suggest that the revolution in information and communications technologies play a key role. And indeed, a number of the studies cited above either assume or speculate that information technology is driving the changing relationship between skills, cities, and productivity.
In a paper called, "Did the death of distance hurt Detroit and help New York?" economists Edward Glaeser and Giacomo Ponzetto make this connection explicitly.

…

Movements in art, philosophy, and science are often associated with cities; Adam Smith, founding father of economics, was a product of the Scottish enlightenment centered in Edinburgh.
Technology is little different. Economist Edward Glaeser describes Detroit in the early 20th century as a place where seemingly every block had its own would-be carmaker, tinkering with designs and production processes in constant competition with and awareness of rivals. Even when ideas are formed in isolation, their full development and exploitation requires the assistance provided by urban networks. The McCormick family developed a mechanical reaper in the quiet of agricultural Virginia. But to manufacture and distribute the machines, Cyrus McCormick took the family business to Chicago, to have better access to markets and skilled labor. Cities aggregate these interactions -- between one thinker and another, between inventor and investor, or between seller and buyer -- and therefore help societies build upon themselves.

…

Each year, local government officials might adopt a planned level of allowable capacity expansion – a budget – that is then used to navigate NIMBY waters. Residents' demands can be accommodated in whatever way the city likes, so long as the net change in potential development meets the budget. If nothing else, the zoning budget plan turns neighborhood groups into adversaries rather than allies in the effort to shape planning decisions – a useful outcome, so long as the groups can be convinced of the general utility of increased development in the first place.[18]
Economist Edward Glaeser argues for a variant on this proposal relating to historical preservation designations. NIMBY groups are often quick to seek preservation of properties targeted for development on historical grounds. Sometimes, neighbors are in the right; in the past, rapid development has erased important and beloved structures from urban landscapes.

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The Rent Is Too Damn High: What to Do About It, and Why It Matters More Than You Think
by
Matthew Yglesias

Instead, the land itself is more valuable largely because permission to build is such a valuable commodity. In his book Triumph of the City, Edward Glaeser discusses the costs of these density restrictions primarily in terms of anti-skyscraper sentiments in classic cities, such as Paris, and with reference to historical preservation rules. But in terms of aggregate impact, these measures are relatively minor. Most Americans live in the suburbs, and by their nature suburbs take up the vast majority of the space in any metropolitan area. Their suburban character is upheld not only by consumer preference but also by draconian central planning measures like Johnson County’s rules against narrow lots or 47-foot buildings.
And of course cities have rules, too. Washington, DC, is unusual in having a height act that prohibits skyscrapers downtown by limiting buildings to about 110 feet in height.

…

Today’s rules still separate residential uses from industrial uses but go far beyond any plausible health concerns. For example, in Johnson County, Kansas, in the suburbs west of Kansas City, it’s generally illegal to build a house that’s over 40 feet tall—except, that is, in RN-2 districts where it’s illegal to build a house that’s over 35 feet tall. Johnson County also specifies what size lot you can build a home on. In one district, a minimum width of 100 feet and an area of not less than one acre is required. In another, the minimum width is still 100 feet but the minimum total area is two acres. In a third, it’s 150 feet and three acres.
That’s a lot of rules. And they matter a lot.
In a 2005 paper, economists Edward Glaeser, Joseph Gyourko, and Raven Saks used a method called “hedonic price estimation” and found that “generally a quarter acre [of land] is worth about ten times more if it sits under a house than if it extends the lot of another house.”

…

If we don’t allow tall buildings to go up on that land, people will have to commute a longer distance.
The New American Geography
There is another option besides denser cities or more sprawling ones: People can just relocate to other cities altogether. And increasingly, that’s what Americans have been doing. If the only way to afford a place in a safe neighborhood in some metropolitan areas is to bear the enormous costs of long commutes, those are just cities with little if any housing that’s truly affordable. The natural choice is to go to the cities that aren’t choked with these problems.
As Forbes magazine put it, “It’s no secret that the Southeast and Western United States are booming. The costs of living and doing business there are often cheaper than in big coastal cities.” People have to go somewhere, and by and large they’re going where it’s cheap. That’s why between 2000 and 2010 the Dallas and Houston metropolitan areas each added about 1.2 million people, dwarfing the approximately 500,000 each added by the much bigger New York, Los Angeles, and Chicago metro areas.

I then go on to list some ways in which we could improve on the current situation by restructuring regional policy in the UK.
What makes cities succeed?
It is worth starting with some observations about what makes cities succeed and fail.
The acknowledged expert on the subject is Harvard academic Edward Glaeser, author of The Triumph of the City.1 He and I have been working along parallel lines on the driving forces behind the economic growth of cities for more than twenty years now and although we have never corresponded, our views appear to have moved in similar directions.
Glaeser’s key insight is that cities depend on transport. Historically it has been difficult for land transport to feed large cities which has limited the growth of those cities who do not have access to sea or river transportation. He points out that before vehicles using anything other than animal power, the cost of land transport was thirty times higher than that of transport on water.

…

Simulations in the US suggest that when applied to the UK, subsidies on this scale could potentially create up to a million new jobs.11 So if there is a will to make the rest of the UK as successful as London it can be done.
Other countries
Silicon Valley, Boston and in a different way Bangalore are world renowned for their digital economies. But we have shown that there is a range of cities in the US with growing digital economies. The latest group to start to present themselves are the rust belt cities of the Northern mid-west. Detroit might take some time to reinvigorate itself, with unpaid city workers and feral dogs roaming the streets but Chicago, Minneapolis and even Buffalo, famously written off by economist Edward Glaeser, look like candidates for success. And of course Silicon Valley is not the only part of the West Coast to be host to a digital economy – both Seattle and Portland Oregon are already successfully driving Flat White Economies of their own.

…

‘The economic contribution of the media sector in Glasgow’: Report for the Glasgow Chambers of Commerce April 2014
37. www.ft.com/cms/s/2/ad9ab0a2-9e1e-11e2-bea1-00144feabdc0.html#axzz2Umx03300
38. features.techworld.com/sme/3589108/edinburgh-scale-up-fanduel-rejected-by-80-investors-on-way-to-becoming-1bn-firm/
39. www.ft.com/cms/s/0/58d74174-7381-11e2-9e92-00144feabdc0.html#axzz3NC4cAj7g
40. www.cebr.com/reports/uk-local-innovation-index
CHAPTER SIX
1. Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier, Edward Glaeser, 2011, Penguin.
2. The details are contained in the ‘Report From The Joint Select Committee Of The House Of Lords And The House Of Commons On The Port Of London Bill’: Joint Select Committee, Houses of Parliament.
3. Personal correspondence.
4. I have used England rather than the UK as a reference point here for consistency, because of past changes in the status of Ireland within the UK, and possible future changes in the status of Scotland within the UK over the period.
5.

Minority European Versus Mostly European Colonies
Illiberal Democracy
Fareed Zakaria, in his 2003 book, The Future of Freedom, has brought to wide attention the idea of “illiberal democracy.” Why do democracies sometimes produce awful government despite free elections?
A big problem with democracy and development, particularly with uneducated voters, is that the politicians could appeal to voters’ gut instincts of hatred, fear, nationalism, or racism to win elections. Edward Glaeser of Harvard had the insight that politicians will promote hatred when it helps achieve other unrelated political goals.26 A politician who wants to avoid redistribution to the poor will preach ethnic hatred toward a poor minority that happens to be ethnically distinct. Thus, for example, rich white leaders in the American South defeated populism in the late nineteenth century by persuading poor whites to hate poor blacks.

…

On December 24, 2004, the New York Times did a story on China’s textile enclaves. Datang is China’s Socks City, producing nine billion pairs of socks a year, a third of the world’s output. As recently as the late 1970s, Datang was a sleepy rice-growing village of less than a thousand people. People sewed socks in their spare time and sold them by the road in baskets. Ms. Dong Ying Hong worked in the 1970s as an elementary-school teacher at nine dollars a month. She gave up her teaching to make socks at home. Today, she is a millionaire as the owner of Zhejiang Socks.
Near Datang, in coastal China, there are other enclaves: Underwear City, Necktie City, Sweater City, and Kid’s Clothing City. Hong Kong investors brought modern technology and designs to Necktie City in 1985; the workers at the initial enterprises soon left to start their own necktie companies.

It will not come to Detroit or Buffalo in the way it is coming to Chicago, New York, and Washington, D.C. Some cities will lack the central job base to generate a large-scale affluent urban revival, and will lag behind their more fortunate counterparts by a long period of years, if they ever get there at all. This is the argument of scholars such as Edward Glaeser and Richard Florida, who see an increasing bifurcation between cities economically equipped to regenerate themselves in the twenty-first century and those whose obsolete industrial economies will leave them mired in the downtown blight and exurban outward pressures of an earlier era. They have a point. There is no evidence that Detroit will produce a large cohort of downtown dwellers anytime soon. But despite the unevenness, demographic inversion will apply in more cities than many critics have imagined thus far.

…

Mayor White once commented that “one reason Houston is affordable is that they don’t have to pay lawyers several extra thousand per lot to go through a zoning.”
Despite the existence of informal zoning by other municipal codes, several scholarly studies have pointed to the absence of zoning in its official sense as the main reason the city remained (relatively) affordable even in its most desirable districts during the height of the national real estate boom of the early 2000s.
In 2008, the Harvard economist Edward Glaeser published an essay in City Journal that attributed lower housing costs in Houston directly to the absence of official zoning laws and the relative simplicity of the permitting process. “The unavoidable fact,” Glaeser wrote, “is that New York makes it a lot harder to build housing than Houston does. The permitting process in Manhattan is an arduous, unpredictable multiyear odyssey involving a dizzying array of regulations, environmental and otherwise, and a host of agencies.

Perhaps this example is a little far-fetched, but
it illustrates well the point that the ability to ship weightless ‘products’ at almost no cost could boost existing urban centres.
Edward Glaeser at Harvard offers another argument in favour of an urban
renaissance. He argues that telecommunications may be complementary to
face-to-face contact rather than a substitute for it. This means cities will become more important as communications improve in quality and become
cheaper. His research indicates two conditions that produce this result. Communications will favour the cities if urban residents use them more than rural
residents; and if the value of interaction between people increases, say because
the ideas that need to be exchanged become more complex and creative. He
and a co-author write:
‘The rise in the New York multimedia industry may be a sign of big cities’
comparative advantage in facilitating the difficult information flows involved in cutting-edge industries ...

I must also thank Bill
Allen, Jane Ashley, Ed Balls, Ruth Ben-Ghiat, Simon Briscoe, Lindsay Fraser,
Paul Gregg, Gerry Holtham, Will Hutton, Vinita Juneja, Mervyn King, Denis
McShane, Bethan Marshall, Richard Marshall, Bill Martin, Ed Mayo, David
Miles, Henry Neuberger, Gus O’Donnell, Trevor Phillips, Penelope Rowlatt,
Peter Sinclair, Jamie Stiehm, Raj Thamotheram, Nick Timmins, David Walton,
and Martin Weale for helpful suggestions and friendly criticism. Thanks also
to Edward Glaeser at Harvard University and Paul Krugman at MIT for providing references and papers.
I owe a great debt to The Independent, especially my editor Andrew Marr
and his deputy Colin Hughes. The newspaper has not only allowed me to try
out ideas, but has also proved a constant source of stimulus thanks to the
The Weightless World
xxii
wonderful people who work there. Anthony Bevins, Yvette Cooper, Matt
Hoffman, Andrew Marshall, Hamish McRae, Suzanne Moore, John Price,
Polly Toynbee, Roger Trapp and David Walker all — whether they knew it or
not — made an important contribution to The Weightless World.

It is true that real prices in many countries did shoot up vertiginously in the years immediately prior to the crisis, but that is the exception, not the rule.7
Add all these things together, and it becomes clear why property is a paradise for students of behavioral finance, the idea that psychology can explain investors’ systematic errors. In a 2013 lecture to the American Economics Association, Edward Glaeser, a Harvard academic, described nine different episodes of property bubbles in the United States, from a land boom in Alabama in 1819 to the skyscraper craze in New York in the 1920s. He revealed a consistent failure to remember a very basic rule of economics: supply and demand. The boom in Alabama in 1815–1819 was driven by the belief that its cotton-growing soil and English demand would deliver endless profits; instead, more cotton was grown, driving prices down and land values with it.

Cary, ‘Why do Americans Work so Much More
than Europeans?’, Federal Reserve Bank of Minneapolis Quarterly Review
(2004).
29. Steven Davis and Magnus Henrekson, Tax Effects on Work Activity (2004).
30. HM Treasury, Public finances databank; ONS, Labour Force Survey,
8 December 2011.
31. HMRC, Income Tax Liabilities, by Income Range, http://www.hmrc.gov.
uk/stats/income_tax/menu.htm
32. Alberto Alesina, Edward Glaeser and Bruce Sacerdote, Work and Leisure
in the US and Europe: Why so Different? (2005).
33. http://scrapthetax.co.uk/newsshow.aspx?id=3
34. ONS, Labour Market Statistics and Economics and Labour Market Review
The data for 2011 cover January to November inclusive.
35. Data from the Department of Work and Pensions, May 2011.
36. Jean-Baptiste Michau, European Unemployment: How Signiﬁcant was a
Declining Work Ethic (CentrePiece, 2009).
37.

…

David Willetts, The Pinch: How the Baby Boomers Took Their Children’s
Future – And Why They Should Give it Back (Atlantic Books, 2010).
65. http://www.dailymail.co.uk/news/article-2055497/JEREMY-PAXMANBaby-Boomers-selﬁsh-generation-history.html
66. http://www.telegraph.co.uk/ﬁnance/personalﬁnance/pensions/8840963/
Baby-boomers-are-very-privileged-human-beings.html
67. http://www.telegraph.co.uk/ﬁnance/personalﬁnance/pensions/8840963/
Baby-boomers-are-very-privileged-human-beings.html
132 Britannia Unchained
68. http://www.economist.com/node/15495760
69. http://www.telegraph.co.uk/ﬁnance/personalﬁnance/pensions/8840963/
Baby-boomers-are-very-privileged-human-beings.html
70. http://www.economist.com/node/15495760
71. http://www.ft.com/cms/s/0/7831bd68-6f56-11e1-b368-00144feab49a.
html#axzz1paqUyRCO
Bibliography
Adams, Jonathan, and James Wilsdon, The New Geography of Science: UK
Research and International Colloboration (Demos, 2006).
Alesina, Alberto, Edward Glaeser and Bruce Sacerdote, Work and Leisure in the
US and Europe: Why So Different? (2005).
Autor, D., The Polarization of Job Opportunities in the U.S. Labor Market:
Implications for Employment and Earnings (Center for American Progress
and the Hamilton Project, 2010).
Balls, Edward, Euro-Monetarism: How Britain was Ensnared and How it Should
Escape (Fabian Society, 1992).
Blanden, Jo, and Stephen Machin, Recent Changes in Intergenerational Mobility
in Britain (Centre for Economic Performance, 2007).

…

The result is that our employment market
is not an accurate reﬂection of the real demand for skills in the global
economy. Distinctions about capability and ability are much more
obvious when maths and science are under discussion than when
arts subjects are being considered. This makes arts subjects inherently
attractive for the wavering student.
While many an Oxford classicist still enters the City in London,
banks ﬁll the need for mathematical knowledge with foreign quant
experts. One banker estimated that only one in eight high-level
mathematicians recruited in the City came from the UK.38 This is
hardly surprising given that in India and China top executives and
bankers are often paid a lot less for doing the same job. The Chief
Executive of the ICBC, by market capitalisation the world’s largest
bank, based in Hong Kong, earns $235,000 a year while the heads
of the Bank of China and CCB earn $229,000 apiece.39 Demand for
top French maths graduates remains high, and recruiters openly admit
that they only consider Oxbridge in the UK, compared to broader
recruitment from France, Germany and Singapore.40
Although science is particularly affected, there is a wider problem
with academic attainment overall.

For example, debt may allow those with irrational beliefs to buy homes, a channel that we emphasize in chapter 8.
9. Edward Glaeser, Joseph Gyourko, and Albert Saiz, “Housing Supply and Housing Bubbles,” Journal of Urban Economics 64 (2008): 198–217, provide the motivation for the use of housing -supply elasticity to generate variation in how bubbly a housing market is.
10. Mian and Sufi, “Consequences of Mortgage Credit Expansion”; Albert Saiz, “The Geographic Determinants of Housing Supply,” Quarterly Journal of Economics 125 (2010): 1253–96.
11. We have on purpose set the y axis labels to match the y axis labels from fig. 6.2. This allows for a direct comparison between inelastic and elastic housing-supply cities.
12. The expansion of credit availability allowed some existing home owners to buy bigger homes, but this represented a small part of the population.
13.

From 1999 to 2001, inelastic cities experienced slightly higher house-price growth than elastic cities. But the real difference occurred during the height of the boom, from 2001 to 2006. House prices rose by almost 100 percent in inelastic cities in these five years. In elastic cities, they rose only 40 percent. House prices increased in inelastic cities by more than twice those in elastic cities. House-price growth during the boom was highly uneven across the country.
If the housing bubble caused credit expansion, then we would observe a credit expansion to marginal borrowers only in cities that experienced a housing bubble. In other words, since there was no substantial house-price bubble in the elastic housing-supply cities, we should not observe aggressive expansion in debt in these cities if the pure animal spirits view holds. However, the evidence refutes the predictions of the pure animal spirits view.

Lipset argues that Americans’ belief in individualism and liberty and their hostility to government are the source of many differences between the United States and other rich countries.1
In the early 2000s, John Micklethwait and Adrian Woolridge, a British editor and writer for the Economist magazine, took a close look at the peculiarities of American politics and political culture. In their book The Right Nation, they conclude that “the United States has always been a conservative country, marinated in religion, in love with business, and hostile to the state.… Americans are exceptionally keen on limiting the size of the state and the scope of what it does.”2
A more recent statement of this view comes from Alberto Alesina and Edward Glaeser, who argue that differences in the generosity of government social programs across the world’s rich nations stem from differing popular views of the causes of poverty. Alesina and Glaeser find that in countries in which a larger share of the population believes people’s effort is the key determinant of their income, government spending on social programs tends to be lower. In nations where people deem luck more important, social program expenditures tend to be higher.3 The United States is among the former.

The Condition of Education. Washington, DC: US Department of Education.
National Commission on Higher Education Attainment. 2013. “An Open Letter to College and University Leaders: College Completion Must Be Our Priority.” Washington, DC: American Council on Education.
Nelson, Timothy J. and Kathryn Edin. 2013. Doing the Best I Can: Fathering in the Inner City. Berkeley: University of California Press.
Newman, Katherine S. 1999. No Shame in My Game: The Working Poor in the Inner City. New York: Vintage Books and Russell Sage Foundation.
Newman, Katherine S. 2006. Chutes and Ladders: Navigating the Low-Wage Labor Market. New York and Cambridge, MA: Russell Sage Foundation and Harvard University Press.
Newman, Katherine S. and Elisabeth S. Jacobs. 2010. Who Cares? Public Ambivalence and Government Activism from the New Deal to the Second Gilded Age.

Seen this way, many of New York City’s neighborhoods aren’t nearly dense enough, particularly if they want to retain even some of the varied architecture and small-scale streets that make cities great. The urban economist Edward Glaeser wrote that simply rejecting denser, taller development creates more problems if the overall number of available homes doesn’t keep pace with population growth. “When the demand for a city rises, prices will rise unless more homes are built. When cities restrict new construction, they become more expensive.” Expensive like San Francisco, where antidevelopment policies have greatly limited new market-rate home building in the hope of preserving affordability. Stunting new residential construction is one of the reasons why housing in San Francisco has become so scarce and thus less affordable to the very people the policy was intended to help. And by limiting denser urban development within city limits, more people are forced to sprawl even farther around the Bay Area, eroding the greenbelt—a recreational oasis that makes San Francisco such an attractive city in the first place.

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twelve times the national rate: United States Census Bureau, “Census Bureau Reports 1.6 Million Workers Commute into Manhattan Each Day,” March 5, 2013, accessed August 5, 2015, www.census.gov/newsroom/press-releases/2013/cb13-r17.html, http://www.census.gov/newsroom/press-releases/2014/cb14-r06.html
lower per capita energy use: David Owen, “Greenest Place in the U.S.? It’s Not Where You Think,” Yale Environment 360, October 2009, accessed August 5, 2015.
three quarters of the nation’s economic: Bruce Katz and Jennifer Bradley, The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy (Washington, DC: Brookings Institution Press, 2013), 1.
1 million people in New York City: City of New York, PlaNYC, 4.
nationwide by 2050: United Nations, World Urbanization Prospects, 24.
“they become more expensive”: Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin Group, 2011), Kindle Edition, Locations 238–41.
fewer miles on average than a decade ago: Doug Short, “Vehicle Miles Traveled: The Latest Look at Our Evolving Behavior,” Advisor Perspectives, July 21, 2015, accessed August 5, 2015, www.advisorperspectives.com/dshort/updates/DOT-Miles-Traveled.php.

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We invite you to view something you experience every day in ways that you might never have imagined. We hope it inspires city officials, planners, and all other city residents to initiate changes in their cities around the world. The new operating code for streets we reveal in this book is already being translated into projects in global cities, from pocket parks and plazas in Mexico City and San Francisco to pedestrian- and transit-friendly road redesigns in Los Angeles and Buenos Aires, to parking-protected bike lanes in Chicago and Salt Lake City and reclaimed streets for pedestrians near the Colosseum in Rome. If it can happen in New York City, according to the Sinatra model of transportation theory, it can happen anywhere.
INTRODUCTION
A New Street Code
Every city street has an underlying operating code, and no matter how exotic the place, the streets from Melbourne to Mumbai to Manhattan are all failing our cities in exactly the same way.

If, however, the only difference between the rich and the poor countries is physical capital, the obvious question, posed by the University of Chicago Nobel laureate Robert Lucas in a seminal paper in 1990, is, Why does more money not flow from rich countries to poor countries so as to enable the poor countries to buy the physical capital they need?2 After all, poor countries would gain enormously from a little more capital investment: in some parts of Africa, it is easier to get to a city a few hundred miles away by taking a flight to London or Paris and taking another flight back to the African destination than to try to go there directly. Commerce would be vastly increased in Africa if good roads were built between cities, whereas an additional road would not make an iota of difference in already overconnected Japan. Indeed, Lucas calculated that a dollar’s worth of physical capital in India would produce 58 times the returns available in the United States. Global financial markets, he argued, could not be so blind as to ignore these enormous differences in returns, even taking into account the greater risk of investing in India.

Going to a university located in the centre of a city; enjoying a life which does not depend on the car; staying around for the first job or perhaps moving to another city centre; postponing learning to drive because the need is not pressing, insurance expensive and parking space hard to find; being frugal with money on account of student loan repayments; using a bike or walking for exercise and convenience, and public transport for the bigger distances; finding cheap rail fares through student discounts and online advance booking, bus arrival times via apps and delays from twitter feeds; wanting not to worry about drink‑driving on a Friday night; taking pride in software skills, rather than car mechanics; perhaps even preferring video games such as Grand Theft Auto (‘drive somewhere, shoot something, drive back’) to real‑life driving—all of these factors seem increasingly common in many developed countries and contribute to the decline in driving amongst younger people.
There is growing recognition of the economic and cultural importance of cities, even in a world in which digital technologies allow us to be dispersed geographically yet interact continuously. It is in cities that we attain critical mass. Persuasive arguments, both economic and cultural, in favour of cities are articulated by two prominent US academics. Richard Florida maintains that metropolitan regions with high concentrations of technology workers, artists and musicians exhibit a higher level of economic development. This well‑educated ‘creative class’ fosters an environment that attracts more creative people and the businesses where they work. Edward Glaeser emphasises ‘agglomeration economics’, which refers to increases in productivity associated with urban proximity: larger pools of skilled staff to draw upon, suppliers and customers close to hand, and spillovers of technical know‑how so that ideas diffuse rapidly—both through organised discussion amongst those with similar expertise and in gossip.

…

Many cities are experiencing a central area revival after a period when it seemed that new service sector firms were moving out to isolated offices in edge‑of‑city business parks or to smaller towns further afield. But the tide turned. The desire of people and businesses to interact, both during working hours and after, is bringing them back to the city centre, which performs its traditional role as the place for mixing and matching, working and playing, cooperating and competing. Cities are where agglomeration spurs creativity, innovation, economic energy and cultural vitality.
Successful cities
For cities to function, their inhabitants have to be able to get around within them, and also to travel beyond. For low‑density cities, the car dominates. But for high‑density cities, there is too little road space for cars and buses, which become slow and unreliable ways of travelling due to traffic congestion. Successful cities are investing in speedy and reliable rail systems, whether above or below ground.

…

A relatively recent city like Los Angeles, with low density and high car dependency, is very different from the high densities found in Manhattan or Central London where road capacity for the car is limited and much more use is made of public transport. Fifty years ago, when car ownership was low but growing rapidly, it was thought that cities might be adapted to absorb the car. Many US cities went a long way in that direction, as did some Japanese cities, and as are some Chinese cities, with elevated urban freeways and multi-story parking. A number of British cities damaged their urban fabrics and, arguably, hindered their economic development by trying too hard to accommodate the car.
Winston Churchill said: ‘We shape our buildings, and afterwards our buildings shape us.’ The same is true of cities. The more attractive and successful cities are those that have pushed back the car in favour of creating space for pedestrians, improving public transport and providing for cycling.

pages: 337words: 86,320

Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are
by
Seth Stephens-Davidowitz

., “The Association Between Income and Life Expectancy in the United States, 2001–2014,” JAMA 315, no. 16 (2016).
178 Contagious behavior may be driving some of this: Julia Belluz, “Income Inequality Is Chipping Away at Americans’ Life Expectancy,” vox.com, April 11, 2016.
178 why some people cheat on their taxes: Raj Chetty, John Friedman, and Emmanuel Saez, “Using Differences in Knowledge Across Neighborhoods to Uncover the Impacts of the EITC on Earnings,” American Economic Review 103, no. 7 (2013).
180 I decided to download Wikipedia: This is from Seth Stephens-Davidowitz, “The Geography of Fame,” New York Times, March 23, 2014, SR6. Data can be found on my website, sethsd.com, in the section “Wikipedia Birth Rate, by County.” For help downloading and coding county of birth of every Wikipedia entrant, I thank Noah Stephens-Davidowitz.
183 a big city: For more evidence on the value of cities, see Ed Glaeser, Triumph of the City (New York: Penguin, 2011). (Glaeser was my advisor in graduate school.)
191 many examples of real life imitating art: David Levinson, ed., Encyclopedia of Crime and Punishment (Thousand Oaks, CA: SAGE, 2002).
191 subjects exposed to a violent film will report more anger and hostility: Craig Anderson et al., “The Influence of Media Violence on Youth,” Psychological Science in the Public Interest 4 (2003).
192 On weekends with a popular violent movie: Gordon Dahl and Stefano DellaVigna, “Does Movie Violence Increase Violent Crime?”

…

Steven Pinker, who kindly agreed to write the foreword, has long been a hero of mine. He has set the bar for a modern book on social science—an engaging exploration of the fundamentals of human nature, making sense of the best research from a range of disciplines. That bar is one I will be struggling to reach my entire life.
My dissertation, from which this book has grown, was written under my brilliant and patient advisers Alberto Alesina, David Cutler, Ed Glaeser, and Lawrence Katz.
Denise Oswald is an amazing editor. If you want to know how good her editing is, compare this final draft to my first draft—actually, you can’t do that because I am not going to ever show anyone else that embarrassing first draft. I also thank the rest of the team at HarperCollins, including Michael Barrs, Lynn Grady, Lauren Janiec, Shelby Meizlik, and Amber Oliver.
Eric Lupfer, my agent, saw potential in this project from the beginning, was instrumental in forming the proposal, and helped carry it through.

…

So why do some places seem to allow the impoverished to live so much longer? What attributes do cities where poor people live the longest share?
Here are four attributes of a city—three of them do not correlate with poor people’s life expectancy, and one of them does. See if you can guess which one matters.
WHAT MAKES POOR PEOPLE IN A CITY LIVE MUCH LONGER?
The city has a high level of religiosity.
The city has low levels of pollution.
The city has a higher percentage of residents covered by health insurance.
A lot of rich people live in the city.
The first three—religion, environment, and health insurance—do not correlate with longer life spans for the poor. The variable that does matter, according to Chetty and the others who worked on this study? How many rich people live in a city. More rich people in a city means the poor there live longer.

Third, a proper measure of freight costs over time would have to account for changes in service quality, such as faster ocean transit and reduced cargo theft, and no freight cost index does this. Fourth, a large number of freight shipments occur either within a large company or at prices privately negotiated between the shipper and transportation carriers, so the information required to measure costs economywide often is not publicly available. Edward L. Glaeser and Janet E. Kohlhase, “Cities, Regions, and the Decline of Transport Costs,” Working Paper 9886, NBER, July 2003, p. 4.
7. U.S. Congress, Joint Economic Committee, Discriminatory Ocean Freight Rates and the Balance of Payments, November 19, 1963 (Washington, DC, 1964), p. 333; John L. Eyre, “Shipping Containers in the Americas,” in Pan American Union, “Recent Developments in the Use and Handling of Unitized Cargoes” (Washington, DC, 1964), pp. 38–42.

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A trucker can deposit a trailer at a customer’s loading dock, hook up another trailer, and drive on immediately, rather than watching his expensive rig stand idle while the contents are removed. All of those changes are consequences of the container revolution. Transportation has become so efficient that for many purposes, freight costs do not much effect economic decisions. As economists Edward L. Glaeser and Janet E. Kohlhase suggest, “It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.” Before the container, such a statement was unimaginable.6
In 1961, before the container was in international use, ocean freight costs alone accounted for 12 percent of the value of U.S. exports and 10 percent of the value of U.S. imports.

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So was the city’s Department of Marine and Aviation, which ran the docks; it had waged a bitter and unsuccessful battle to keep the Port Authority from taking over the city’s two main airports in 1947, and it did not want to give up another of its functions. Most of all, city politicians did not want the Port Authority on their turf. City officialdom was convinced that the piers were a potential gold mine, not a badly outdated piece of infrastructure. As Robert F. Wagner, then Manhattan borough president and a member of the city’s governing Board of Estimate, asked later, “The piers were making money; why didn’t they take over the sanitation department instead?” The Board of Estimate rejected the Port Authority’s offer in 1948 and turned down a revised proposal in 1949.15
While New York officials thought they could modernize the city’s piers without the Port Authority’s involvement, the financially troubled city of Newark, New Jersey, had no such illusions.

By 2025, it looks as if there will be five billion people living in cities (and rural populations will actually be falling fast), and there will be eight cities with more than twenty million people each: Tokyo, Mumbai, Delhi, Dhaka, São Paolo, Mexico City, New York and Calcutta. As far as the planet is concerned, this is good news because city dwellers take up less space, use less energy and have less impact on natural ecosystems than country dwellers. The world’s cities already contain half the world’s people, but they occupy less than 3 per cent of the world’s land area. ‘Urban sprawl’ may disgust some American environmentalists, but on a global scale, the very opposite is happening: as villages empty, people are living in denser and denser anthills. As Edward Glaeser put it, ‘Thoreau was wrong. Living in the country is not the right way to care for the Earth. The best thing that we can do for the planet is build more skyscrapers.’
After a ‘stinking hot’ evening in a taxi in central Delhi in the 1960s, the ecologist Paul Ehrlich had an epiphany.

In 2008 for the first time more than half the people in the world lived in cities. That is not a bad thing. It is a measure of economic progress that more than half the population can leave subsistence and seek the possibilities of a life based on the collective brain instead. Two-thirds of economic growth happens in cities.
Not long ago, demographers expected new technology to hollow out cities as people began to telecommute from tranquil suburbs. But no – even in weightless industries like finance people prefer to press into ever closer contact with each other in glass towers to do their exchanging and specialising, and they are prepared to pay absurdly high rents to do so. By 2025, it looks as if there will be five billion people living in cities (and rural populations will actually be falling fast), and there will be eight cities with more than twenty million people each: Tokyo, Mumbai, Delhi, Dhaka, São Paolo, Mexico City, New York and Calcutta.

Nonetheless, it shows the high salience put on development issues. The agreement may be found at http://allafrica.com/peaceafrica/resources/view/00010926.pdf.
CHAPTER 11: ECONOMIC SECURITY IN A CHANGING WORLD
263 heavy investors both in R & D: Data on R & D expenditure, investment in knowledge, and tertiary attainment are available from the OECD Factbook 2006: Economic and Social Statistics.
265 seem to be much less likely: Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, “Why Doesn’t the US Have a European-Style Welfare System?” NBER Working Paper Series, no. 8524 (October 2001). Available online at http://www.nber.org/papers/w8524.
265 “Racial discord plays”: Ibid., p. 4.
267 the Iraq War costs: Peter Orszag, Director of Congressional Budget Office, Statement before the Committee on the Budget of the U.S. House of Representatives on the Estimated Costs of U.S.

The enormous densities of urban populations mean that pollutants, too, are heavily concentrated, far above the power of nature to disperse the pollutants through harmless flows into waterways and the atmosphere. Therefore, unless pollution is controlled through appropriate technologies and policies, cities can become sites of untold ecological destruction. Also, by bringing millions of people into proximity, cities have long been host to infectious diseases that depend on large populations of susceptible individuals to sustain the long-term transmission of the disease. Moreover, the rising populations of large cities will be vulnerable to other natural hazards, including floods, landslides, and earthquakes. This is especially the case because the world’s cities have been heavily concentrated along the coastlines to take advantage of access to global trade, fisheries, and the amenities of coastal life. My colleagues at The Earth Institute have calculated that roughly 10 percent of the world’s population lives in low-lying coastal zones (within one hundred kilometers of the coast and at less than ten meters above sea level), though such areas constitute a mere 2.2 percent of the Earth’s land area.

In reality, as Swain tells me, it’s much more benign. Being extra fretful and cautious around a newborn is a good thing for most parents: Babies are fragile. It’s worth the tradeoff. Similarly, living in cities—with their cramped dwellings and pounding noise—stresses us out on a straightforwardly physiological level and floods our system with cortisol, as I discovered while researching stress in New York City several years ago. But the very urban density that frazzles us mentally also makes us 50 percent more productive, and more creative, too, as Edward Glaeser argues in Triumph of the City, because of all those connections between people. This is “the city’s edge in producing ideas.” The upside of creativity is tied to the downside of living in a sardine tin, or, as Glaeser puts it, “Density has costs as well as benefits.” Our digital environments likely offer a similar push and pull.

…

His work is also described in Anna Abramson and Dawn Rouse, “The Postpartum Brain,” Greater Good (Spring 2008), accessed March 19, 2013, greatergood.berkeley.edu/article/item/postpartum_brain/.
living in cities . . . stresses us out on a straightforwardly physiological level: Clive Thompson, “The Ecology of Stress,” New York, January 24, 2005, accessed March 19, 2013, nymag.com/nymetro/urban/features/stress/10888/.
makes us 50 percent more productive: Edward Glaeser, Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier (New York: Penguin, 2011), Kindle edition.
“the city’s edge in producing ideas”: Ibid.
“Density has costs as well as benefits”: Ibid.
in June 2011, chess master Christoph Natsidis was caught: Dylan Loeb McClain, “Disqualified by Evidence on a Phone,” The New York Times, June 12, 2011, accessed March 20, 2013, www.nytimes.com/2011/06/12/crosswords/chess/chess-christoph-natsidis-punished-for-cheating.html; Peter Doggers, “Player Caught Cheating at German Championship,” ChessVibes (blog), June 05, 2011, accessed March 20, 2013, www.chessvibes.com/reports/player-caught-cheating-at-german-championship.

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Until the summer of 2012, when that myth came crashing down—as the post-’90s youth of Shifang staged one of the most successful environmental protests ever.
Shifang is a city in southwestern China. In late June 2012, local party officials announced they would begin building a $1.6 billion plant to process molybdenum-copper alloy. The plan was slated to create thousands of construction jobs in an area that was in distress, because of both the country’s economic slowdown and an earthquake that hit four years earlier. But many locals worried about toxic side effects. Copper plants often produce slag filled with noxious chemicals, including arsenic; many such areas have seen cancer rates soar. Chinese citizens are painfully aware of how rampant development is ruining the countryside. In some industrial cities the air is so foul that people wear surgical masks outside and rivers run in different colors each day of the week.

PLOS One 5, no. 12 (2010); Jonah Lehrer, “Groupthink: The Brainstorming Myth,” New Yorker, January 30, 2012; Greg Lindsay, “Engineering Serendipity,” New York Times, April 7, 2013; Michelle Young, “Googleplex, Mountain View: Designing Interior Spaces at an Urban Scale,” Untapped Cities, January 2, 2012, http://​untappedcities.​com/​2012/​01/​02/​googleplex-​mountainview-​designing-​interior-​spaces-​at-​an-​urban-​scale/; Paul Goldberger, “Exclusive Preview: Google’s New Built from Scratch Googleplex,” Vanity Fair, February 22, 2013. Another social scientist who has written persuasively about physical proximity as a catalyst for ideas and economic growth is Edward Glaeser, who writes: “The most important communications still take place in person, and electronic access is no substitute for being at the geographic center of an intellectual movement.” Edward Glaeser, Triumph of the City (New York: Penguin, 2011).
10. Sheldon Cohen, “Social Relationships and Susceptibility to the Common Cold,” in Emotion, Social Relationships, and Health, ed.

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In every situation Sylvie had deployed her social networks during a period of crisis, but she seemed oblivious—as most of us are—to the way her face-to-face social connections helped her. “I was reading about it, I called my doctor friends, I got together with them, and I got all this information from people I knew,” she told me.
I asked who had helped her the most. “Friends,” she replied, without so much as a pause. “I called my good friend Mona, who lives in another city and is married to an oncologist. I then talked to her husband for three hours, even though we weren’t really friends as two couples. She was my friend when I lived in that city, so her husband helped me. And I had Celeste. Celeste helped because she’s totally organized and very businesslike, and she’s a nurse and has been in this medical world forever. And she said okay, you’re going to this doctor, because she’s the best surgeon in town, and you’re going to do this and you’re going to do that.

…

The second hit would come much later, when these babies were older.
6
Digital Natives
Electronic Devices and Children’s Language Development, School Progress, and Happiness
Her name was Claudia Aristy and she may well have been headed for a life of inner-city poverty had she not found herself in Bellevue Hospital’s adolescent parenting group in New York. It was 1996; Aristy was just sixteen and she had recently arrived from the Dominican Republic. During a previous visit to New York she had fallen in love with a thirty-year-old man and become pregnant. “So I had come back to New York to live with my baby’s father,” Aristy told me as we chatted in Bellevue’s pediatric day clinic. “And my grandmother decided Bellevue was a safe place where I could get good medical care.”
A home-care worker who knew her way around the city, Claudia’s grandmother took the subway to the clinic with her granddaughter the first time. After that, Claudia was on her own.

He found that men who had served in the early 1970s ended up earning about 15 percent less a decade later than men who had never served.15
Columbia University economists Donald Davis and David Weinstein used the US bombing of Japanese cities during the Second World War to test two models of city growth. One model was based on scale economies (decline in production costs as urban density increased), and the other was based on locational advantages (such as access to a natural seaport). Even though the bombing was obviously not random, it created a natural way to test whether cities that had been badly destroyed would remain depressed or bounce back to their original position. The model based on scale economies suggested that cities would not recover after being sharply reduced in size, whereas the locational-advantage model predicted otherwise. Davis and Weinstein found that most Japanese cities returned to their prewar relative size within a decade and a half, providing support for the latter model.16
Economists employ a wide a range of strategies to verify whether the immediate implications of different models are confirmed in the real world, from the informal and anecdotal to the sophisticated and quantitative.

…

The system was eventually undermined in the 1970s by the growth of speculative capital flows, which Keynes had warned against. But it remained the standard for global institutional engineering. Through each successive upheaval of the world economy, the rallying cry of the reformers was “a new Bretton Woods!”
In 1952, a Columbia University economist named William Vickrey proposed a new pricing system for the New York City subway. He recommended that fares be increased at peak times and in sections with high traffic, and be lowered at other times and in other sections. This system of “congestion pricing” was nothing other than the application of economic supply-demand principles to public transport. Differential fares would give commuters with more-flexible hours the incentive to avoid peak travel times. They would allow passenger traffic to spread out over time, reducing the pressure on the system while enabling even larger total passenger flow.

For the role of governance in development, see Daron Acemoglu
and James Robinson, Why Nations Fail: The Origin of Power, Prosperity and
Poverty (New York: Crown Business, 2012).
10
This hypothesis, often attributed to Joseph Stiglitz, The Price of Inequality, has been the focus of several analyses. See, for example, Michael
Kumhof and Romain Rancière, “Inequality, Leverage and Crises,” IMF
Working Paper, no. 10/268, 2011). For a critique of this hypothesis, see Edward Glaeser, “Does Economic Inequality Cause Crises?”, New York Times,
Economix Blog, 2010. A recent synthesis of the debate is put forward by
Till van Treeck, “Did Inequality Cause the U.S. Financial Crisis?”, Journal
of Economic Surveys, 10.1111, 2013.
9
Globalization and Costly Inequality137
and the rising income inequality observed over the two or
three decades before the crisis would be accompanied by a
decrease in consumption and therefore a drop in economic
activity.

…

The second channel through which inequality can have
undesirable effects on economic efficiency is through the
“spontaneous” redistribution that it can engender through
various social and political mechanisms. A good example of
this is the cost of the endemic violence afflicting certain
countries or cities. Without any hope of ever joining the
middle class, some youth in Brazilian favelas, Colombian
poblaciones, and even the poor neighborhoods or banlieues
of certain large cities in developed countries will try to make
money from criminal activity: theft, assault, kidnapping,
drug trafficking. The rest of the population is then obliged
to allocate a significant part of their income to security
in order to protect themselves. Anyone who has walked
through Rio, Bogotá, or Mexico City will have been struck
by the walls, bars, and security personnel—often heavily
armed—that guard apartment buildings, stores, banks, and
company headquarters.

…

At the
macroeconomic level, the disinflation that took place at
the beginning of the 1980s re-­energized financial markets
by eliminating a major source of uncertainty about the cost
of and the real return on capital. This disinflation occurred
alongside the deregulation of financial market operations,
based on re-­establishing competition among operators of
all kinds and the computerization of markets, and led to
the 1986 “Big Bang” of the City in London. The success of
these reforms, which could be seen in the impressive development of the City, led to them being adopted first in the
United States and then in continental Europe, where they
were facilitated by the growing openness of international
financial markets. This change was particularly conspicuous in France, where, until the late 1980s, financial mechanisms remained constrained by very rigid regulatory systems based on a few large nationalized banks and the strict
regulation of foreign exchange operations.

San Francisco was the first city to pass paid-sick-days legislation, followed by a string of major cities and Connecticut in 2011. But the fight for this basic benefit was nothing short of a political showdown in New York City. After five years of activism and lobbying, the City Council passed a fairly weak version of paid sick days that covered about 1 million workers. Then the WFP ran a progressive slate of candidates for the City Council in 2012, and they all won their seats. As Cantor told me, with the new City Council in place, it took only about three hours to amend the law to cover another 300,000 to 500,000 workers. Three hours compared to three years—that’s the difference electing progressives to office can make in the lives of the working class. The City Council had more than enough votes to pass the measure, but the speaker of the council at the time was Christine Quinn, and she refused to bring the bill to the floor for a vote.

…

Missouri Jobs with Justice, along with the Fight for $15 campaign, SEIU, and others, fought hard for the $13 minimum wage that the Kansas City council passed in July 2015. The law isn’t perfect, because it includes a young person’s exemption, which allows employers to pay subminimum wage to younger workers. The law also doesn’t have an automatic cost-of-living adjustment. But its passage was significant not only for workers in Kansas City but potentially for workers across the state. When Kansas City passed its law, it created a domino effect: Kansas City County, St. Louis, and the state legislature are all now actively considering minimum-wage increases to at least $13 an hour, despite claiming that they couldn’t do it just weeks before the city council in Kansas City passed its bill.
Bolden is motivated by her own experience growing up in a union household.

It is to this new world of work built by folks like Bloomberg and Google’s Sergey Brin and Larry Page that we now turn.
1∗Never mind that with global reserves dwindling, oil is now increasingly dirty and difficult to extract.
2∗Its main purpose at the time? Helping to build the hydrogen bomb—only the single most destructive invention in human history still to this day.
3∗Americans work an average of 25.1 hours per week (averaged across all working-age persons) in contrast to Germans, for instance, who average 18.6 hours. We work over 6 more weeks than the French per year. See Alberto Alessina, Edward L. Glaeser, and Bruce Sacerdote, “Work and Leisure in the U.S. and Europe: Why So Different?” Working Paper no. 11278, National Bureau of Economic Research, Cambridge, Mass., 2005.
One Plus a Hundred Zeros
Welcome to Your (N)Office
If there is any “center” or “downtown” to our new economy (and to Elsewhere, U.S.A., for that matter) it is just off the 101 Freeway in Mountain View, California.

…

“The dripping box jutting out of the bedroom window joined the TV aerial on the roof as instant fixtures in the American suburban landscape.”11
Partly as a result of artificial cooling, the 1960s became the first decade since the Civil War during which more Americans moved to the South than left it. In the 1970s, that trend would strengthen to the point that twice as many folks moved to Dixie than quit it. As Jones says, “Walk down the street of a Southern or Southwestern city at night, and there’s no one out. All you can hear is the sound of the heat pump on the side of the house; all you can see is the blue glow behind the living-room curtains.”12 Gone were seersucker suits. Southern fashion looked not much different from what was worn in Pennsylvania or Illinois. Sunbelt cities—if you could actually call them cities—were thriving; but they were so low density sprawling and absent any economic center, that they were really more like suburbs connected by freeway arterioles. This air-conditioned-induced mass migration would have enormous consequences for national politics as the South regained the dominant position in federal electoral politics that had been wrested away by FDR’s New Deal coalition.

…

Artists in New York, in fact, threatened to strike on September 11, 1961, if they did not get concessions from the Fire Department and other city agencies charged with enforcing building codes. (The city’s population, I am sure, trembled at the prospect of its artists going on strike.) They were trapped between business and residential rules. On the one hand, commercial building codes told them they could not stay over or work odd hours in their loft studios; such regulations were meant to protect workers in the sweatshops and other factories, most of which had long since been vacated. On the other hand, residential rules forbade them, officially, from plying their trade at home. The artists of 1961, working in illegal lofts, felt like they were in hiding from building inspectors and anyone who might report them to such authorities. They decried it as a municipal shame on a city that purported to be the capital of art and culture in the Western Hemisphere.

Urban and suburban gardening are burgeoning. Individuals are planting vegetable plots, community gardens are sprouting, and in a number of major cities, efforts to grow healthy organic food for inner-city residents are thriving. Detroit, Milwaukee, and Chicago all have large-scale organizations that are reshaping residents’ food habits. Farmers’ markets, community-supported agriculture, local sourcing by restaurants, Slow Food chapters, school-yard gardens, and related initiatives are on the rise. Practices are expanding from simple vegetable plots to urban homesteading. People are growing mushrooms, keeping bees, and raising livestock. A chicken underground has sprung up in cities with laws against backyard poultry, and urban poultry households stretch from Los Angeles to South Portland, Maine. Backyard livestock has become so popular that some locales have even spawned mobile slaughtering businesses, trucks that move through neighborhoods to kill the animals on-site.

…

In recent years, the technical feasibility of home production for basic needs such as food, energy, clothing, and housing has grown. Self-provisioning has become one leg of the stool for living smart and sustainably.
Sound far-fetched, especially for urban households? The merger of sustainability and self-sufficiency has created an explosion of activity and creativity inside and outside cities. The best known of the trends is food cultivation, through organic gardening, urban homesteading, gleaning, and even a movement to grow fresh food “in small places,” such as crowded city apartments. Urbanites are moving far beyond herbs and vegetables, by planting fruit trees, putting chickens in their backyards, and keeping bees. People are also going off the grid, with solar panels and passive solar design, geothermal pumps, windmills, and wood pellet and corncob stoves. The alternative energy movement is expanding beyond heat and electricity into appliances.

This point is emphasized in
Waldron, “Democratic Theory and the Public Interest,” and in
Estlund, Democratic Authority.
21. See Joseph Henrich et al., “Group Report: What Is the Role
of Culture in Bounded Rationality?,” in Bounded Rationality:
The Adaptive Toolbox, ed. Gerd Gigerenzer and Reinhard
Selten (Cambridge, MA: MIT Press, 2001), 353–54, for an
entertaining outline in connection with food choice
decisions.
22. Edward Glaeser, “Psychology and Paternalism,” University of
Chicago Law Review (2001): 133.
23. On some of the technical complexities, see Christian List and
Robert E. Goodin, “Epistemic Democracy: Generalizing the
Condorcet Jury Theorem,” Journal of Political Philosophy 9
(2001): 283–88, 295–97.
24. Ibid.
25. See Surowiecki, The Wisdom of Crowds, 3–4.
26. Condorcet, Selected Writings, 156–57.
27. Even self-evidently arbitrary anchors have significant effects on
people’s judgments.

Overall, statistical groups and interacting groups did about
the same.
This finding is typical. With respect to questions with
definite answers, deliberating groups tend to do about as
well as or slightly better than their average member, but not
as well as their best members.22 One study does find that
The Surprising Failures of Deliberating Groups / 59
when asked to estimate the populations of U.S. cities, groups
did as well as their most accurate individual member;23 but
in the vast majority of studies, this does not happen.24 Hence
it is false to say that group members usually end up deferring
to their internal specialists. Deliberating groups and statistical groups often do about equally well (or poorly).
For example, no significant differences are found between
deliberating groups and average individual performances in
numerical estimates involving the number of beans in a jar
or the length of lines.25 Another study tested whether
deliberating groups were particularly good at telling whether
people were telling the truth or lying.26 The individual votes,
predeliberation, were 48 percent correct, about the same as
the postdeliberation judgments.

Not really practical, no matter how beautiful the math might be.22
Confronting the uncomfortable realities of market misfires would require a different approach and a different style of economics. It was one that treated each type of market—along with its own particular defects and failures—as a largely independent exercise. You would never, for example, build a generic scale model of “City” to try to understand the urban landscapes of Cairo, Mexico City, Amsterdam, and New York. This new generation of economists wasn’t going to abandon models altogether; they were necessary to understand any general issue—if you want to understand traffic patterns in Amsterdam, you would stop well short of building a full-scale model of the city.
MIT economist Evsey Domar—who rose to prominence as a mathematical economist in the 1940s and ’50s—drew a comparison to the writing of a novel or play. An author doesn’t observe the minutiae of everyday life when trying to tell a story: it would be pointless and hopelessly boring to sit through life’s many dull moments.23 Rather, “the construction of an economic model, or of any model or theory for that matter . . . consists of snatching from the enormous and complex mass of facts called reality, a few simple, easily-managed key points which, when put together in some cunning way, become for certain purposes a substitute for reality itself.”

…

But at the time of these early stamp auctions, the telegraph had only just been invented. Out-of-town collectors had to mail in their bids, and auction houses needed to come up with a way of allowing mail-in bids to compete alongside live participants.
One stamp dealer, William P. Brown of New York City, described the process they devised:
That out-of-town collectors may have equal facilities for purchasing with city collectors, bids may be sent to the auctioneers, Messrs. Bangs & Co., or to William Erving, P.O. Box 3222, N.Y. City, who will either of them represent their bids the same as though they were personally present, and without charge. Thus, supposing either of these parties receives two bids on one lot of 20 and 25 cents apiece, they would start the lot at 21 cents, at which price it would be given to the person sending the 25 cent order, unless some one present advanced, when they would continue to bid, stopping at the limit of 25 cents . . .

Wells, “Adapt or perish.”
CITIES AS INNOVATION HUBS
The geographic foci for innovation are almost always cities. Why are cities growing so rapidly even as network technologies allow us to be more distributed, to do more at a distance? Three percent of the world’s population lived in cities in 1800. Today 54 percent of the world’s population lives in cities, and just 100 cities account for 30 percent of the world economy.
In some respects, cities have always been drivers of a society’s growth, even when 97 percent of the population lived in rural areas. Empires have always been powered by their cities. Baghdad led the Abbasids to greatness. Rome did the same for the Romans, as did Constantinople for the Byzantines and then the Ottomans. The British colonized and established a chain of cities that linked their empire together, including Cape Town (colonized in 1814), Singapore (1824), and Hong Kong (1842).

…

Things like knowing exactly when the train will come, being able to go online instead of standing in line to access a government service, and being able to provide real-time feedback that informs how and when city services are delivered. The capability for doing this skews toward very large cities and increasingly involves big data, according to Stephen Goldsmith, a professor and director of the Innovations in American Government Program at Harvard’s Kennedy School of Government. He directs Data-Smart City Solutions, a project “focused on government efforts to use and blend new technologies, big data analytics and community input.”
As cities get tech savvy, this effectively means that global centers with lots of money and the capabilities Goldsmith describes (like New York City, Dubai, London, San Francisco, Tokyo, and Seoul) are those likely to build big data applications that are highly appealing to citizens, and this attracts the “next economy” class.
Cities that are aspiring to become global hubs, like Jakarta, São Paulo, and Mumbai, need to simultaneously invest in physical infrastructure and the big data applications that often attach to this infrastructure.

See, for example, Sue Kovach Shuman, “At the Market: How to Sniff Out Where Your Garlic Came From,” Washington Post, June 20, 2007, F07.
CHAPTER NINE: THE DOUBLE-HEADED DRAGON
189 so cheap as to be essentially free: Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger (Princeton, N.J.: Princeton University Press, 2006). In this remarkable book, Levinson quotes economists Edward L. Glaeser and Janet E. Kohlhase: “It is better to assume that moving goods is essentially costless than to assume that moving goods is an important component of the production process.”
189 China and the containers they carry: Joseph Tarnowski, “NONFOODS: HBC/GM: Dueling for Dollars,” Progressive Grocer, September 15, 2006.
189 the vast bulk of them from China: See “About the Port,” Web site: the Port of Los Angeles at http://www.portoflosangeles.org.
190 only one-twentieth of the world’s manufactured goods: Ted.

…

By Christmas the place had done an almost inconceivable $2 million in sales.
FERKAUF pulled a low-margin, low-service, high-turnover, down-and-dirty discount model out of the shadows and onto the cover of Fortune magazine. Many others were to follow. Upstarts such as Two Guys, G.E.M. G.E.X., Zayre, Spartan, FedMart, and Bargain City built sprawling 70,000-to 200,000-square-foot discount stores in New York, Philadelphia, Detroit, and Chicago, and in medium-sized cities such as Canton, Mississippi, and Yakima, Washington. Like Ferkauf many of these operators leased their land and buildings. This freed up capital and made it easy to pick up and move when and where the shoppers did. These stores were free agents without loyalty to any particular community, and they held no loyalty to any particular supplier.

…

There was a grain of truth to this, but only a grain. Pyrotechnics might draw customers initially, but the low prices kept them coming.
The impact of the low-price juggernaut in the post-Sputnik era is difficult to overstate. Discounters shuffled the American demographic, abetting the further decline of already troubled city centers by luring still more customers to the suburbs and beyond. Department stores had for some time felt the pinch of urban flight, but many could at least rely on their suburban branches to sputter some revenue back into their city locations. Typically, these suburban stores were expensively constructed and carried merchandise priced at least as high as downtown stores. Discounters undercut prices at both the urban and suburban locations, and choked off the money flow. And discounters were promiscuous, carrying anything that could be bought cheap and sold in large lots.

Percy Barnevik, Global Forces of Change, lecture presented at the 1997 International
Industrial Conference, San Francisco, September 29, 1997, p. 4.
14. This finding is generally confirmed by Daniel Ben-David and L. Alan Winters,
‘‘Trade,
Income Disparity and Poverty,’’ World Trade Organization Special Study No. 5
(Geneva: World Trade Organization, 1999), http://www.wto.org/english/res_e/booksp_
e/disparity_e.pdf. It is also supported by Alberto F. Ades, and Edward L. Glaeser,
‘‘Evidence on Growth, Increasing Returns, and the Extent of the Market,’’ Quarterly
Journal of Economics 114, no. 3 (August 1999). One argument against free trade
299
bringing growth is that growth was higher during the early postwar decades than
it is today, in the age of globalization. But this objection ignores the fact that
growth is quicker when huge tariffs begin to come down. Growth is also generally
fastest when the starting point is poverty, with any number of opportunities of
obtaining a big return on investments, owing to the shortage of capital and disastrous
political affairs formerly prevailing—as, for example, after a war.

…

What we gain by being free to choose everything at home
is that this opportunity makes it hard to find any place that feels
really authentic, at least on the main tourist routes. This is a
problem, but it’s another one of those luxury problems. A man
from Prague was sometimes visited by Czech friends who had
settled abroad. They deplored McDonald’s having come to
Prague, because it threatened the city’s distinctive charm. This
response made the man indignant. How could they regard his
home city as a museum, a place for them to visit now and then
in order to avoid fast food restaurants? He wanted a real city,
including the convenient and inexpensive food that these exile
Czechs themselves had access to. A real, living city cannot be a
‘‘Prague summer paradise’’ for tourists. Other countries and their
populations do not exist in order to give us picturesque holiday
experiences. They, like us, are entitled to choose what they think
suits them.4
Cultures change, and the greater the number of options, the
faster change will be.

…

Instead, pollution follows an inverted U-curve. When
growth in a very poor country gathers speed and the chimneys
begin belching smoke, the environment suffers. But when prosperity
has risen high enough, the environmental indicators show an
improvement instead: emissions are reduced, and air and water
show progressively lower concentrations of pollutants. The cities
with the worst problems are not Stockholm, New York, and
Zu¨rich, but rather Beijing, Mexico City, and New Delhi. In
addition to the factors already mentioned, this is also due to
the economic structure changing from raw-material-intensive to
knowledge-intensive production. In a modern economy, heavy,
dirty industry is to a great extent superseded by service enterprises.
Banks, consulting firms, and information technology corporations
do not have the same environmental impact as old factories.

What’s overlooked, though, is that even in business—even in industries with a large N of competitors—feelings of rivalry intensify competitive effort. The rivalry effect has been studied in many arenas, including Scottish knitwear companies, Norwegian groceries, video game producers, and banks. But it’s in the Emilia-Romagna region of Northern Italy that local rivalries are producing economic value in surprising ways.
Around the historic city of Bologna, a new, modern industry has sprouted up and managed recently to dominate the $28.6 billion world market—for packaging machinery. This region has earned the nickname “Packaging Valley.”
That plastic clamshell your phone charger came in, or the foil blister pack your heartburn pill pops out of, or the six-pack box of bouillon-cube dice in your pantry—there’s a good chance the machine that pressed it came from Packaging Valley.

pages: 578words: 168,350

Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life in Organisms, Cities, Economies, and Companies
by
Geoffrey West

As presently constituted, our continued success requires the supply of coal, gas, oil, fresh water, iron, copper, molybdenum, titanium, ruthenium, platinum, phosphorus, nitrogen, and much, much more to be available at an exponentially increasing rate.
2. CITIES, URBANIZATION, AND GLOBAL SUSTAINABILITY
Perhaps our greatest invention has been the very stage upon which this panoply of socioeconomic interactions, mechanisms, and processes that drive exponential expansion has been played out, namely the city. This is the view expressed by the urban economist Edward Glaeser in his book The Triumph of the City.1 For concomitant with the population explosion over the past two hundred years has been the exponential urbanization of the planet. The city is the ingenious mechanism we have evolved for facilitating and enhancing social interaction and collaboration, two necessary components of successful innovation and wealth creation.

…

Jane understood this truth more than fifty years ago, and only now are some of the experts beginning to recognize her extraordinary foresight. Many writers have picked up this theme, including the urban economists Edward Glaeser and Richard Florida, but none has been as forthright and bold as Benjamin Barber in his book with the provocative title If Mayors Ruled the World: Dysfunctional Nations, Rising Cities.5 These are indicative of a rising consciousness that cities are where the action is—where challenges have to be addressed in real time and where governance seems to work, at least relative to the increasing dysfunctionality of the nation-state.
3. AN ASIDE: A PERSONAL EXPERIENCE OF GARDEN CITIES AND NEW TOWN
Following the destruction wrought by the Second World War in which millions of houses were destroyed, the socialist government in Britain faced a mammoth housing crisis.

…

THE REMARKABLY REGULAR STRUCTURE OF MOVEMENT IN CITIES
The extraordinary diversity and multidimensionality of cities has led to a host of images and metaphors that try to capture particular instantiations of what a city is. The walking city, the techno-city, the green city, the eco-city, the garden city, the postindustrial city, the sustainable city, the resilient city. . . and, of course, the smart city. The list goes on and on. Each of these expresses an important characteristic of cities, but none captures the essential feature encapsulated in the rhetorical Shakespearean question “What is the city but the people?” Most images and metaphors of cities conjure up their physical footprint and tend to ignore the central role played by social interaction. This critical component is captured in a different kind of metaphor such as the city as a cauldron, a crucible, a mixing bowl, or a reactor in which the churning of social interactions catalyzes social and economic activity: the people’s city, the collective city, the anthro-city.

., 22.
101 developed a master plan for the city: Arif Hasan, Understanding Karachi (Karachi: City Press, 1999), 28.
101 a population of 5.4 million by 1981: Arif Hasan and Masooma Mohib, “The Case of Karachi, Pakistan,” p. 3, from The Challenge of Slums: Case Studies for the Global Report on Human Settlements 2003 (London and Sterling, VA: Earthscan, 2003).
102 539 irregular neighborhoods... 2.5 million people: Interview with Rafique Engineer, March 2010.
103 Doxiadis... had proposed to demolish: Constantinos Doxiadis, Between Utopia and Dystopia (Hartford, CT: Trinity College Press, 1966), 63.
103 “had no tangible results”: Leslie Green and Vincent Malone, “Urbanization in Nigeria: A Planning Commentary” (New York: Ford Foundation, 1972–73), 31.
103 “Chaotic traffic conditions”: Ibid., 14–15.
103 A more recent study: Edward Glaeser, Triumph of the City (New York: Penguin, 2011), 73.
105 “Everybody says land mafia”: Interview with Perween Rahman, March 2010.
105 “Now everybody is a land supplier”: Ibid.
106 “I was designing a hotel”: Interview with Perween Rahman, May 2008.
106 “It was the start of a land grab”: Interview with Perween Rahman, July 2010.
107 “He was a man who would say”: Interview with Perween Rahman, May 2008.
107 grants from the Bank of Credit and Commerce International: Akhtar Hameed Khan, Orangi Pilot Project: Reminiscences and Reflections (Karachi: Oxford University Press, 1996), 49.
107 “I became a state within a state”: Interview with Shamsuddin, March 2010.
108 “They are redundant”: Interview with Perween Rahman, March 2010.
109 “What we do”: Interview with Wahab Khan, May 2008.

…

He represented a global flow of money and ideas from one instant city to another. Just as McCartt was building an entire upscale neighborhood on new land that was largely segregated from the rest of the city, many proposals in other cities seemed to focus less on improving an existing city than on starting fresh. Officials in Mumbai planned to demolish one of the city’s famous slums to make room for upscale towers. They were actually building an entire satellite city of the metropolis, called Navi Mumbai, or New Mumbai, which quickly grew to a population of two million. At Inchon, South Korea, the port for the megacity of Seoul, developers were planning a new city on a man-made island; an American firm was leading the project. Chinese officials brought in a Chilean planner attached to a London firm to help design a satellite city outside the absurdly growing metropolis of Shanghai.

…

A NOTE ON POPULATION FIGURES
Cities in this book are usually discussed in terms of their metropolitan areas—the central city plus suburbs and other outlying areas linked by commuting. New York, for example, is not described as a city of 8.2 million (the approximate number within the city’s legal boundaries) but as a city of about nineteen million. The metropolitan area is the best definition of a city in the age of the automobile. The United Nations Population Division measures each city as an “urban agglomeration,” which is more compact than a metropolitan area, but both terms encompass the great bulk of a modern city and are used almost interchangeably in this book. When comparing cities, I rely on UN estimates, because they are compiled by the same people using the same methods. UN estimates, however, are ultimately based on national census figures that vary in their quality and timing.

pages: 273words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy
by
Peter Temin

Princeton: Princeton University Press.
Agan, Amanda Y., and Sonja B. Starr. 2016. “Ban the Box, Criminal Records, and Statistical Discrimination: A Field Experiment.” University of Michigan Law and Economic Research Paper 16-012. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2795795. Accessed September 20, 2016.
Agee, James, and Walker Evans. 1941. Let Us Now Praise Famous Men. Boston: Houghton Mifflin.
Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote. 2001.“Why Doesn’t the United States Have a European-Style Welfare State?” Brookings Papers on Economic Activity (Fall): 187–278. Also available as NBER Working Paper No. 8524.
Alexander, Michelle. 2010. The New Jim Crow: Mass Incarceration in the Age of Colorblindness. New York: New Press.
Alichi, Ali, Kory Kantenga, and Juan Solé. 2016. “Income Polarization in the United States.”

…

They argued that a farmer thinking of moving to the city was attracted by the wage available in the city, which was substantially higher than the wage he was earning in the countryside. He would leave if his expected wage in the city would be larger; the expected wage is the product of the wage differential and the probability that the worker would find a high-paying job in the city. The farmer was assumed to anticipate both the higher wage and the difficulty of obtaining a job that paid this wage.7
The economists recognized that the effort to transfer into the capitalist sector was neither certain nor swift. It was not enough to move to the city; the aspiring worker had to find a good job. We know that this was hard to do from the massive slums that surround all big cities in developing countries. These slums are full of migrants who came to the city and then failed to find a good job.

…

The growth of Japan and China accelerated the decline of American manufacturing and the demand for unskilled labor in and around factories. Industrial cities found that people were less mobile than jobs, and urban prosperity was replaced by urban joblessness. Black workers moved to Northern cities to find jobs in the Great Migration, only to find that the jobs had disappeared.
The Great Migration, which as noted earlier ended in 1970, did not lead to integrated housing in the North. As soon as Southern black workers appeared in Northern cities, white families began to move out of the cities. White flight was responsible for one-half of the increase in segregation in the 1930s. Prosperous white urban residents continued to leave cities for the suburbs after the Second World War, avoiding newly integrated schools. They were encouraged by the GI Bill and other federal policies that provided generous mortgages for suburban houses and highways for suburbanites to drive to work.

These include Joe Stiglitz, a Nobel prize-
winner and a former chief economics at the IMF; Jean-Paul Fitoussi and Francesco
Saraceno of the Paris-based Centre for Economic Research; Professor Raghuram
Rajan, another former IMF chief economist; Gerry Holtham, a former City fund
manager and co-director of the Investment Management Resource Centre at Cardiff
University; the American economist Ravi Batra; and Michael Kumhof and Romain
Rancière, two IMF research economists.242
The latter, for example, have argued that ‘The crisis is the ultimate result, after a
period of decades, of a shock to the relative bargaining powers over income of two
groups of households, investors who account for 5 per cent of the population, and
whose bargaining power increases, and workers who account for 95 percent of the
population (and whose bargaining power has fallen).’243
Although these are the views of a small minority and remain highly controversial,
they have prompted an ongoing debate. Reviewing some of the evidence, Harvard
economist David Laibson concluded, ‘income inequality was not a major
contributor’.244 In January 2011, in a spirited debate at the annual meeting of the
American Economic Association in Denver, two economists—Daron Acemoglu of
MIT and Edward Glaeser of Harvard took on Chicago’s Raghuram Rajan, with
Glaeser concluding that ‘Inequality seems as if it was only a small part of the
story.’245 Then in February, in the first attempt at a systematic analysis of the
relationship between rising inequality and banking crises, two Oxford academics,
including the distinguished economist, Tony Atkinson, concluded that ‘at first sight this
does not provide overwhelming evidence for the increase [in inequality] hypothesis’.

…

See Buchanan et al, Undisclosed and
Unsustainable, Centre for Research on Socio-Cultural Change, Manchester University, 2009.
130 Centre for Cities, Cities Outlook, 2009.
131 Centre for Cities, Public Sector Cities, Trouble Ahead, July 2009.
132 Buchanan et al, op. cit. p 22.
133 J Hills et all (eds), Towards a More Equal Society, Policy Press, 2009, p 2.
134 Ibid. p 28.
135 Lansley, Life in the Middle, op. cit. figure 8.
4
A FAUSTIAN PACT
In early January 1998, a large group of London traders, fund managers and financiers
braved the pouring winter rain to gather at the Mansion House, the grand official
residence of the Mayor of the City of London. The group—gathered in the very heart
of the old financial sector known as the Square Mile—had been invited to debate the
motion ‘This house believes that City salaries are totally fair and justified’. Most of
the 200 at the debate would have been amongst the highest paid in the land.

…

But eight months before the Mansion House debate, the Major
government had been ousted by the electorate, and Labour had been returned with a
record post-war majority.
The City had once been apprehensive about the return of Labour to power. But
following the loss of the 1991 election, the Party’s leaders set about winning friends
in the City. Members of the Shadow Cabinet, led by the shadow Chancellor, John
Smith, toured the dining-rooms of the City meeting senior finance figures in what
became known as the ‘prawn cocktail offensive’. Stuart Bell MP even went to New
York on a trip paid for by Kleinwort Benson Securities to reassure Wall Street that the
financial markets would be safe in Labour hands. In opposition, Tony Blair had, for a
time, been Labour’s spokesman on the City while Brown immersed himself in the
detail of banking.
In power, the political love-affair with the City launched by the Conservatives
continued.

For the better part of the next several decades, right through the Great Depression, the Second World War, and the postwar era that raised Kitty Genovese, answering those questions became one of sociology’s most important projects.
Then two things happened. First, in 1961, a transplant to New York City from Scranton, Pennsylvania, published arguably the most important twentieth-century treatise on American community. Jane Jacobs’s The Death and Life of American Cities offered a wholly new understanding of municipal success. Conventional wisdom argued that city problems were driven by the chaos of urban life; but Jacobs thought just the opposite. It wasn’t that cities alienated people from one another; quite the opposite, efforts to clean up the nation’s metropolises were sterilizing their streetscapes. The key to a vibrant city, in her view, was to maintain the familiar relationships that arranged neighborhood routines into an intricate ballet. The challenge was to harness the vitality of neighborhood life without stifling it.

…

In the spirit of Jane Jacobs, he compared two places that represented, in similar fashion, broadly divergent experiences: Allentown, Pennsylvania, and Youngstown, Ohio.
Both cities, Safford determined, had through the postwar years emerged as blue-collar, industrial powerhouses. Moreover—and maybe most important—they had both been defined by similarly high quotients of what James Coleman, and later Robert Putnam, had defined as social capital. But that’s where the similarities seemed to end. When each city’s core industrial foundation began to decay in the 1970s and 1980s—as Allentown and Youngstown’s steel mills, brake-assembly plants, and other factories fell on hard times—the cities headed in different directions.25
Allentown claimed the happier of the two stories. The factory town made the subject of a Billy Joel song avoided the perils that might have befallen a city competing with cheaper steel plants overseas.

Some argue that we have less social support and more harried lives than people in comparable nations, at least partly because we don’t want to take the chance that increased social spending and a broader safety net will help “other people,” those slackers and moochers we’ve always feared.
In fact, the United States lags behind all industrialized nations when it comes to direct government funding of health care, family leave, child care, and unemployment benefits. In an influential 2004 book, Fighting Poverty in the U.S. and Europe: A World of Difference, Harvard economists Alberto Alesina and Edward Glaeser attributed most of the gap in social spending between western Europe and the United States to our unrivaled mix of racial and ethnic groups and the distrust that engendered.
Now, when you add in American social spending on public education, which used to be the highest in the world, as well as employer-provided social supports subsidized by government with tax breaks—health insurance and 401(k)s, to name two big examples—the US welfare state isn’t necessarily smaller than that of a lot of industrialized nations.

…

Liberals tend to admire him as an urban innovator who did his best to make the city live up to its promise of opportunity for everyone. Conservatives despise him as someone who caved to black “militants,” as well as to white union leaders, and destroyed New York. Some see him as a dangerous naïf rolled by the city he was supposed to govern.
Liberal journalist Jack Newfield, who loved him, summed it up this way in a Lindsay obituary in 2000: “Lindsay was great on race, but not so great on class. He lacked a certain empathy for the white ethnic communities of the city. . . . The mayor who wanted reconciliation so deeply accidentally created contention and white backlash.” That could be the epitaph of the Democratic Party somewhere around the same time.
We watched from Long Island with optimism as the mayor vowed to unite the city. By the mid-1960s, New York had already become two New Yorks: one for upwardly mobile white-collar workers, and one for the declining working class of every race.

…

In this new Futurama, the entire world is linked by global highways that cut through oceans, rain forests, mountains, polar ice caps, and even outer space (all traveled by presumably GM-made vehicles). The exhibit culminated in the city of the future, and Futurama seemed to be trying to reassure us that the urban experiment would work out in the end. “Its traditions and its faiths preserved, there is a new beauty and new strength in the city of tomorrow,” the confident narrator told us. And we believed him.
At the end of the day my parents, my little brother, and I climbed into a tiny, swaying carriage and rode in an enormous Goodyear tire, a giant Ferris wheel that was, like Futurama, a great big ad. From there, we could see Shea Stadium, the brand-new home of the Mets. We had a panoramic view of the city we loved. Luckily, we couldn’t see the actual future.
As the battles of civil rights and the culture wars that ensued grew more violent and bitter, the white working class grew more alienated, more certain than ever that what some called progress was destabilizing the world they had built.

Yet despite these difficulties, local, regional, and national governments around the world are beginning to incorporate some of the benefits of the platform model into their daily operations. Perhaps not surprisingly, one of the leading examples is the city of San Francisco, perched at the northern end of Silicon Valley. The city’s Open Data policy, originally launched in 2009 for implementation through the Mayor’s Office of Civic Innovation, is designed to promote the sharing of city data through an open-access portal, the creation of public–private partnerships to facilitate the development of value-creating tools that citizens and companies can use, and the promotion of data-based initiatives intended to improve the quality of life for everyone living in and around the San Francisco Bay area.
The city’s data platform, dubbed DataSF, contains a vast array of information about the city, gleaned from both public and private sources, as well as an application programming interface and tips for outside developers who want to use the data to create apps.

…

They included Neighborhood Score, a mobile app that provides a block-by-block health and sustainability score for every area of the city; Buildingeye, a map-based app that makes building and planning information easily accessible; Project Homeless Connect, which uses mobile technology to help people without shelter find the resources they need to get off the streets and into decent housing; and House Fax, a “Carfax for houses,” that allows homeowners and residents to access the maintenance history of a particular building.12
Ongoing efforts to apply platform thinking to San Francisco city government include a number of other initiatives, including the creation of a single central portal where local businesses can manage all the licensing, regulation, and reporting requirements associated with operating in the city; the Universal City Services Card, which provides a one-stop location for accessing San Francisco services ranging from marriage licenses to golf course discounts; and a partnership with Yelp, the restaurant-rating platform, that will incorporate city health department scores for local eateries into their online Yelp profiles.
While San Francisco has advanced the concept of “government as platform” further than most jurisdictions, similar efforts are underway in cities, states, and regions around the U.S. and the world.

Vincent Millay: “Life isn’t one damn thing after another. It’s the same damn thing again and again.” However, she was reacting to much earlier uses of the line, whose true origins we have been unable to trace.
2. Schank and Abelson (1977, 1995).
3. Taleb (2001).
4. Sternberg (1998).
5. Harmon (2006).
6. Polti (1981 [1916]).
7. Tobias (1993, pp. iii–iv).
8. The role of politicians in spreading stories has been emphasized by Edward Glaeser (2002).
9. Finnel (2006).
10. Colburn (1984).
11. Finnel (2006).
12. Shiller (2000, 2005).
13. Shiller (2000, 2005) identified the biggest national stock price increases around the world in recent decades and undertook a media search for the stories in their respective national news media interpreting the increases. He found that journalists were especially creative in telling stories of why a new era was dawning for the economy of the particular country.

…

The maximum price for a Denman seven-row style brush was almost seven times the minimum.4 This study reminds us that while we often do search for the lowest price (sometimes aggressively so), we also often do not make our purchases at the cheapest store (sometimes knowingly so).
If there are significant differences in prices for the same good in the same city, it should then not come as much of a surprise that different firms pay different wages for what would seem to be exactly the same labor, even in the same city. Early evidence came from a striking table published by John Dunlop. Dunlop was one of that crusty breed of applied economists who want to know how the labor market really works. He was as much at home with union leaders as in the halls of Harvard (where in due course he became dean of the faculty). President Lyndon Johnson made him his secretary of labor.

…

The position of the bankers was very much like that of the demolitionists. They faced a tough choice. There was a lot of money to be made in packaging and selling off mortgage securities, except that it was difficult to get rid of the super-senior tranche at a price that would make it worthwhile. The choices were either to play the game, and take the risk, or not to enter the market. The dilemma was expressed most vividly by Charles Prince, then the CEO of CitiGroup, in the Financial Times in the summer of 2007: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”2
There is a simple lesson that comes in loud and clear, not just from the case of the demolitionists and asbestos, but from the collapse of the financial industry. In the case of getting rid of the asbestos, if no one is watching how the asbestos is disposed of, then it will be disposed of in the cheapest way.

The short answer is: freeing human reason unleashes limitless technological innovation.
The Liberated Economy
A few years ago, one of us (Don) was visiting San Francisco with his wife, Kate, and although they had driven up from Southern California without any difficulty, they were warned by the hotel staff not to bother trying to drive around the city. Searching for parking in San Francisco is like trying to find chastity in a brothel. Anyway, it turns out that there are only about four cabs in the entire city, and on their first outing, Don and Kate found themselves standing around for close to an hour before they could hail a taxi, which was driven by an irritated cabbie who reeked of cigarette smoke. Then they discovered Uber.
Within seconds of logging into the Uber iPhone app, Don got a message on his phone: a car was on its way.

Analyses of modern urban economies reflect this. Economists Ed Glaeser and Matthew Resseger find that skilled cities get more productive as they grow, while other places don’t.4 This link, they posit, seems to be a result of the fact ‘that urban density is important because proximity spreads knowledge, which either makes workers more skilled or entrepreneurs more productive’. Big, skilled places are good at making workers more productive. Workers in places like Silicon Valley earn a hefty wage premium over similar workers in other cities, but new arrivals don’t get the premium all at once. Instead it builds over time: evidence that the city is contributing to the knowledge and employability of the workers within it.
Skilled cities have also been the crucible of much of the new sorts of work created over the last generation.

…

So, as social capital loomed larger within rich economies, it became clear that firms were not the only context in which social capital took on new salience. Its rise also boosted the fortunes of big cities with lots of skilled workers. By the end of the 1970s, deindustrialization and suburbanization had many of the rich world’s great industrial cities on the ropes. Populations were crashing. In 1975, New York City very nearly went bankrupt. Popular cinema was filled with dystopian visions of the urban future, in which street punks ruled the streets of gutted cities.
But from the 1980s onwards, a turnaround was apparent in some of those very same distressed cities. Big cities that had retained a sizable population of highly skilled individuals began to thrive, and then to boom. New York City’s population is now as large as it has ever been. San Francisco is an economic powerhouse. Boston is booming.

…

The New York metropolitan area, which itself reached the 1 million person threshold around 1860, was home to more than 15 million people just 100 years later; its population is just over 20 million today and continues to rise.3
Technology allowed humanity to live in ever-larger cities; which would be impossible without steel and electricity, to say nothing of modern agriculture. But big cities are not just curious side effects of the industrial revolution. They are a technology in and of themselves, without which we would all be much poorer and less productive.
Cities thrive and grow because of what economists call increasing returns to scale: the larger a city grows the more productive it becomes. Without increasing returns, cities could not get very big: new arrivals would make the city more crowded and unpleasant but wouldn’t make the local economy more productive. Living standards would fall and people would eventually say to hell with it and move out.

Represented by lawyers from the Institute for Justice, Pagan sued, arguing that the law violated the First
Amendment. The city claimed that the regulation merely prohibited
conduct: namely, parking a car on the street with a For Sale sign that,
according to the city’s police chief, would lead to traffic obstructions
as people stopped to look at the car. The court easily found that the
law restricted Pagan’s commercial speech rights and rejected the
city’s rationalizations.
The only evidence the city offered to justify restricting Pagan’s
speech was an affidavit by the chief of police, which cited no
201
The Right to Earn a Living
supporting proof. Although this seemed like a weak basis for the
city’s actions, the city argued that no such evidence was required
in the first place. “Instead of actual evidence,” the judges noted,
the city “ask[s] us to adopt a standard of ‘obviousness’ or ‘common
sense,’ under which we uphold a speech regulation in the absence
of evidence of concrete harm so long as common sense clearly indicates that a particular speech regulation will directly advance the
government’s asserted interest.”

The Challenges to America’s National Identity (New York: Simon and Schuster, 2004).
27. Alberto F. Alesina, Edward L. Glaeser, and Bruce Sacerdote, “Why Doesn’t the U.S. Have a European-Style Welfare State?” Harvard Institute of Economic Research, Discussion Paper no. 1933, October 2001.
28. Michael Ignatieff, “The Broken Contract,” New York Times Magazine, September 24, 2005, 16.
29. Richard G. Wilkinson, The Impact of Inequality: How to Make Sick Societies Healthier (London: Routledge, 2005).
30. As Christopher Lasch has written, “The mounting evidence of widespread inefficiency and corruption, the decline of American productivity, the pursuit of speculative profits at the expense of manufacturing, the deterioration of our country’s material infrastructure, the squalid conditions in our crime-ridden cities, the alarming and disgraceful growth of poverty, and the widening disparity between poverty and wealth, which is morally obscene and politically explosive as well—these developments, the ominous import of which can no longer be ignored or concealed, have reopened the historic debate about democracy.

…

Shanghai is being built into the world’s largest metropolis, dwarfing New York, London, or São Paulo. City officials have planned fifty years ahead, meaning that despite its population of twenty-six million (thirteen million locals and an equal number of migrants) and growing, it will not descend into the chaotic sprawl of Latin America’s megalopolises but rather remain in the orderly ranks of cities like Tokyo. Neighborhoods are zoned and color-coded, and millions live in podlike apartment capsules. New districts have sprouted that resemble Swiss villages or British towns to appeal to middle-class Chinese—whose empire imports the world to itself. Shanghai is also the hub of a massive city-region of rising prosperity stretching to Nanjing and encompassing multiple cities of five million people each.
Once the city of bicycles, Beijing now seems to have more cars—while bicycles are being recycled.

…

Inequality and instability go hand in hand. Outside Mexico City—and certainly within it—is a country of colonial monuments juxtaposed at every turn with ramshackle slums, with public investment in hospitals and schools an afterthought. The former mayor of Mexico City, Andrés Manuel López Obrador, picked up the slack and built his reputation by creating social and food support programs for the elderly across the sprawling metropolis of twenty million people, almost propelling him into the Mexican presidency in 2006—which he lost by a narrow margin and only after the contest was pushed to the electoral court. As elsewhere in the second world, power in the capital city is tantamount to national power. Obrador took his campaign back to the streets, sponsoring waves of demonstrations in his city to cripple his elected rival, Felipe Calderón.

Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (New York: Crown Publishers, 2012).
6. Edwin G. Burrows and Mike Wallace, Gotham: A History of New York City to 1898 (New York: Oxford University Press, 1999), 122–23.
7. Ira Rosenwaike, Population History of New York City (Syracuse, NY: Syracuse University Press, 1972), 18.
8. Stokes, Iconography of Manhattan Island, 70–78.
9. Quoted in Peter Bernstein, Wedding of the Waters: The Erie Canal and the Making of a Great Nation (New York: W. W. Norton & Company, 2005), 23.
10. Easterly et al. with “A Long History of a Short Block.”
11. Peter Bernstein, Wedding of the Waters, 318–19.
12. Easterly et al., “A long history of a short block.”
13. Edward L. Glaeser, “Urban Colossus: Why New York Is America’s Largest City,” Federal Reserve Bank of New York Economic Policy Review 11, no. 2 (2005): 7–24.
14. Robert Albion and Jennie Barnes Pope, The Rise of New York Port (New York: Charles Scribner’s Sons, 1939), 398.
15.

…

The Normans had invaded Italy south of Rome and established a monarchy over southern Italy between 1061 and 1091. Before the emergence of free cities, the Normans’ Kingdom of Sicily was one of the richest parts of Europe.13 Its capital Palermo was the largest city in Europe in 1200.
But the future belonged to the free cities. Population growth of free cities throughout Western Europe systematically outpaced that of cities under absolute rule. Freedom in a particular region led to the emergence of more new cities, as individuals accustomed to freedom in their original cities came together to form new cities. The statistical results indicate that, on average, a region developed two new cities (of population greater than 30,000) for every century that it had been free of absolute rule—and the already existing cities in free regions grew much more in population than those in unfree regions.14
We see this nowhere more clearly than in Italy itself.

…

As Greif and Tabellini say, “a legal system would have undermined the clans, an outcome opposed by the elders who controlled the clans and the state that used them.”32 China did not institute a commercial legal code until the empire was collapsing in the late nineteenth century.
Cities in China were held back by the lack of cooperation between clans. Clans were responsible for tax collection and educating their members for civil-service exams. Immigrants to the cities remained loyal to their rural-based clans; they did not transfer loyalty to the city. As one scholar says of China in the seventeenth century: “the majority of a city’s population consisted of so-called sojourners, people who had come from elsewhere and were considered (and thought of themselves as) only temporary residents.” As a result, “suspicions were always rife that sojourners could not be trusted.”33 There was no such thing as city self-government in China as there was in the free cities in Europe. The percent of the population living in cities in China remained at only about 3 to 4 percent long after Europe had passed 10 percent early in the Industrial Revolution.

British bankers took the opportunity afforded by the abolition of exchange and capital controls, globalisation, Britain’s historic strength in financial services and the prevailing free-market ideology to build a position of influence in the British state that was much more formidable than any that had been enjoyed by the trade unions. The City reclaimed ancient privileges to restore its nineteenth-century position as an international financial centre, although this was now built upon proprietary trading in financial derivatives and securitisation. This was the purposeful, positive use of power to achieve a feasible aim – a dominant City of London.
Light-touch regulation became as important a mantra to the City as free collective bargaining had been to the unions. Equally, the freedom to exploit tax havens and relieve foreign nationals from their tax obligations was as pivotal to City power as the unions’ insistence on legal immunity from damages in industrial disputes had been to theirs. Just as the unions portrayed themselves as essential to the construction of a Britain in which working-class interests would be enshrined, so the City portrayed itself as essential to a post-industrial Britain in which financial services would be in the vanguard of national wealth generation.

…

Finance was where innovation and entrepreneurship flowered, Prime Minister Blair and Chancellor Brown jointly proclaimed in a competition with the then Conservative opposition to fête the City of London. The factors that helped financial services – light-touch regulation, low taxes and labour market flexibility – allegedly helped all business. Governments should limit their intervention. Nor should they or society be concerned about City pay that was rising beyond the dreams of avarice because that was merely the price of global success.
In the glory days of the boom, Britain was urged to enjoy the spiralling property prices and the rising consumption that came in the wake of the City’s credit creation and wheeler-dealing. Inflation was low. The government’s finances were sound. Employment was on the increase. Big finance ruled and seemed to be delivering.

Quite apart from the nearly three million lives lost in Japan’s doomed bid for empire, by the end in 1945 the value of Japan’s entire capital stock seemed to have been reduced to zero by American bombers. In aggregate, according to the US Strategic Bombing Survey, at least 40 per cent of the built-up areas of more than sixty cities had been destroyed; 2.5 million homes had been lost, leaving 8.3 million people homeless.37 Practically the only city to survive intact (though not wholly unscathed) was Kyoto, the former imperial capital - a city which still embodies the ethos of pre-modern Japan, as it is one of the last places where the traditional wooden townhouses known as machiya can still be seen. One look at these long, thin structures, with their sliding doors, paper screens, polished beams and straw mats, makes it clear why Japanese cities were so vulnerable to fire.
In Japan, as in most combatant countries, the lesson was clear: the world was just too dangerous a place for private insurance markets to cope with.

…

According to Graham Allison, of Harvard University’s Belfer Center, ‘if the US and other governments just keep doing what they are doing today, a nuclear terrorist attack in a major city is more likely than not by 2014’. In the view of Richard Garwin, one of the designers of the hydrogen bomb, there is already a ‘20 per cent per year probability of a nuclear explosion with American cities and European cities included’. Another estimate, by Allison’s colleague Matthew Bunn, puts the odds of a nuclear terrorist attack over a ten-year period at 29 per cent.82 Even a small 12.5-kiloton nuclear device would kill up to 80,000 people if detonated in an average American city; a 1.0 megaton hydrogen bomb could kill as many as 1.9 million. A successful biological attack using anthrax spores could be nearly as lethal.83
What if global warming is increasing the incidence of natural disasters?

This is exactly what Robert Fairlie and Jonathan Robinson’s 2013 study of laptops in the home shows: If you provide an all-purpose technology that can be used for learning and entertainment, children choose entertainment.34 Technology by itself doesn’t undo that inclination – it amplifies it.
Amplifying Power
Back in Bangalore, I once hosted a political science professor, whom I’ll call Padma. She was interested in technology and governance. Padma was in the city to study a program that made the municipal government’s finances transparent to the public. A nonprofit group had convinced the government to set up a tool that let anyone with Internet access see how city money was spent. Citizens were able to see, for example, that 5,000 rupees (~$100) was spent repairing a pothole (expensive, but not unreasonable) or that 500,000 rupees ($10,000) was spent cutting down a tree (not likely; a sign of kickbacks). The nonprofit would complain to the government about egregious spending it discovered.

In Germany, centuries of movement by peasants to cities winnowed down the number of serfs. Runaway serfs who sought refuge in the cities became free, customarily after a year and a day. The first German free city, Bremen, was chartered in 1186. In Western Europe, free labor was an essential part of the modern city: in the countryside, one was bound by custom and tradition, working the land as one’s ancestors had for generations on behalf of the same noble family one’s ancestors had served. In the city, life was different. Workers did whatever job needed to be done; when they saw better opportunities, they took them. The liberating ethos of the city became embodied in the German expression, “Stadtluft macht frei” (City air makes you free).
But in Russia, city air most certainly did not make you free.

One way a turnaround in the economic prospects of France will likely manifest itself is in the emergence of large cities other than Paris.
By virtue of their size, countries with a population of more than 100 million will have many large cities, and so the relative size of the second city does not tell me much about the country. To get a sense of which countries in that cohort have dynamically growing regions leading to more balanced growth, I look at the broader rise of second-tier cities—meaning cities with more than a million people. The broad rise of second-tier cities is particularly important for the largest countries because, due to their size, they should be able to generate a number of rapidly growing urban areas. This part of the rule—tracking the rise of second-tier cities—therefore applies mainly to countries in the next two size categories, those with more than 100 million people and those with more than one billion people.

…

As countries develop, they naturally generate more second-tier cities, so it is also important to compare countries to peers at a similar income level. In the class of countries with an average per capita income around $10,000 and a population over 100 million, Russia is the laggard. Over the last three decades it has seen only two cities grow to a population size of one to five million, compared to ten in Brazil, one of the more dynamic stories in in this class. The most dynamic is Mexico, which has also produced ten cities of more than a million people since 1985, in a national population little more than half of Brazil’s. Mexico is also the only country in this size and income category where many second-tier cities are growing faster than the capital. In recent decades Mexico City has actually lost ground to second-tier cities in share of the total population, which is highly unusual.

Croesus figured he had better withdraw to Sardis and wait until he could gather his allies before attacking Cyrus a second time. Cyrus, aware of Croesus's intentions, hurried toward Sardis, forcing Croesus to face him on the great plain that lies before the city. When Cyrus saw that Croesus had placed his powerful cavalry in the front ranks, he transferred his own horsemen to the camels usually employed in carrying food and equipment. Horses are afraid of camels and cannot stand the sight or the smell of them. The Lydian cavalry was thrown into confusion by the camel charge and the whole Lydian army had to retreat into the city, where they suffered a siege that lasted fourteen days before the Persians finally broke through and claimed victory. The Delphic oracle had got it right again: a mighty empire had been destroyed, but it was the empire of Croesus that fell, not the empire of the Persians.

…

When asked what he meant, Croesus told them that Solon was "a man I would give a great fortune to see talking with all the tyrants of the earth." Cyrus was so moved by what Croesus told him about Solon's visit that he ordered the fire put out and Croesus untied. As they sat together as friends, Cyrus pointed out to Croesus that the crowd they could see in the distance was "looting [his] city and carrying off [his] wealth." Croesus still had his wits about him, despite all he had been through. "It's not my city or my wealth they are looting," he pointed out. "None of it is mine anymore. What they are looting and leading away belongs to you.""
With those poignant words, Croesus fades from view.
The most challenging feature of the Croesus story is in its curious intermixture of luck and skill. Croesus was lucky enough to rule a domain on the banks of the Pactolus, blessed by Midas with an apparently endless supply of gold.

Now that we can work anywhere, the anywhere we mostly want – at least when we are young – is the densest, most high-rise, most hectic of spots. And we are prepared to pay a premium for it. Cities that encourage tall residential buildings in their centres, like Hong Kong or Vancouver, thrive, while those that insist on low-rise profiles, like Mumbai, struggle. The point is that these are not trends that human beings have chosen consciously as policy. The continuing evolution of the city is an unconscious and inexorable momentum.
The same process is continuing all over the world. There is, as Edward Glaeser has observed, an almost perfect correlation between prosperity and urbanisation: the more urbanised a country, the richer it is. If you divide the world into those countries where the majority live in cities, and those where the majority live in the countryside, you find that the former are four times as wealthy, in terms of average income, as the latter.

…

A mouse burns more energy, per unit of body weight, than an elephant; a small city burns proportionately more motor fuel than a large one. Like cities, bodies get more efficient in their energy consumption the larger they grow. There is also a consistent 15 per cent saving on infrastructure cost per head for every doubling of a city’s population size.
The opposite is true of economic growth and innovation – the bigger the city, the faster these increase. Doubling the size of a city boosts income, wealth, number of patents, number of universities, number of creative people, all by approximately 15 per cent, regardless of where the city is. The scaling is, in the jargon, ‘superlinear’. Geoffrey West of the Santa Fe Institute, who discovered this phenomenon, calls cities ‘supercreative’. They generate a disproportionate share of human innovation; and the bigger they are, the more they generate.

…

The sociologist Jane Jacobs was the first to realise that the density of urban living, ‘far from being an evil, is the source of its vitality’ (in John Kay’s words). In her successful opposition to New York’s city planners with their utopian schemes, she championed the unplanned, organic nature of the cities that people love, in contrast to the sterile spaces of planned cities like Brasilia, Islamabad or Canberra. As Nassim Taleb quips, nobody would buy a pied-à-terre in Brasilia the way they would in London.
Today, the most successful cities, like London, New York and Tokyo, are places of fancy food, entertainment, mating arenas (sorry – clubs) and opportunity for the aspiring poor. From Rio to Mumbai cities are the engines of prosperity, the places where people make the transition from poverty to comfort and even wealth. And the ‘death of distance’ engendered by the internet and the mobile phone, far from encouraging people to retreat to isolated idylls in Montana or the Gobi desert, is having exactly the opposite effect.

Journal of Finance 51(3):783–810.
Hacker, Jacob, and Paul Pierson. 2010. Winner-Take-All Politics: How Washington Made
the Rich Richer—and Turned Its Back on the Middle Class. New York: Simon and
Schuster.
Hansmann, Henry. 1990. “Why Do Universities Have Endowments?” Journal of Legal
Studies 19:3–42.
Hansmann, Henry, Daniel Kessler, and Mark McClellan. 2003. “Ownership Form and
Trapped Capital in the Hospital Industry.” In Edward Glaeser, ed., The Governance of
Not-for-Profit Organizations, 45–70. Chicago: University of Chicago Press.
Harbough, William T. 1998. “The Prestige Motive for Making Charitable Transfers.”
American Economic Review 88(2):277–88.
Harriss, C. Lowell. 1951. History and Policies of the Home Owners’ Loan Corporation. New
York: National Bureau of Economic Research.
Hayek, F. A. 1944. The Road to Serfdom.

…

But indebtedness creates a danger for
the rm, leaving open the risk that a going concern could be forced into liquidation by
its creditors.
Governments also have need to borrow, notably when they too are young and at
other times as well, when they foresee greater needs ahead. For example, a new city
may need to build roads and a sewage system in expectation of a later population
in ux, since putting the whole system in place at once is the most e cient approach. It
would be sensible for the city government to nance these infrastructure needs by
borrowing: the current population of the city cannot a ord them, and they ought to be
paid for by the subsequent residents, who will actually use them and be resident in the
city when the debt comes due. Governments may also need to borrow during an
economic crisis, again in expectation of better times ahead. Yet the indebted
government may run into problems, for example if the anticipated future population
does not arrive or if the economic crisis lasts longer than expected.

…

The
more important story is the proliferation and transformation of successful nancial
ideas. Financial innovations emanating from Amsterdam, London, and New York are
developing further in Buenos Aires, Dubai, and Tokyo.
The socialist market economy, with its increasingly advanced nancial structures,
was introduced to China by Deng Xiaoping starting in 1978, adapting to the Chinese
environment the examples of other highly successful Chinese-speaking cities: Hong
Kong, Singapore, and Taipei. The economic liberalization of India, which allowed freer
application of modern nance, was inaugurated in 1991 under Prime Minister P. V.
Narasimha Rao by his nance minister (later prime minister) Manmohan Singh, who
was educated in economics at Nu eld College, Oxford University. The voucher
privatization system introduced to Russia in 1992–94 under Prime Minister Boris Yeltsin
by his minister Anatoly Chubais, following a modi cation of the Yavlinsky plan, was a
deliberate and aggressive strategy to transform Russia’s economy.

See also World Bank (2015).
353 repeatedly and rigorously tested: See Post et al. (2008) and van den Assem, van Dolder, and Thaler (2012) on game shows, Pope and Schweitzer (2011) on golf, Barberis and Thaler (2003) and Kliger, van den Assem, and Zwinkels (2014) for reviews of behavioral finance, and Camerer (2000) and DellaVigna (2009) for surveys of empirical applications of behavioral economics more generally.
353 intriguing finding by Roland Fryer: Fryer (2010).
354 The team of Fryer, John List, Steven Levitt, and Sally Sadoff: Fryer et al. (2013).
354 a recent randomized control trial: Kraft and Rogers (2014).
355 Field experiments are perhaps the most powerful tool we have: Gneezy and List (2013).
356 “If you don’t write it down, it doesn’t exist”: Ginzel (2014).
356 his recent book The Checklist Manifesto: Gawande (2010), pp. 176–77.
356 Into Thin Air: Krakauer (1997).
357 99% of the work is done by the choice architecture: Another example is Alexandre Mas who (sometimes collaborating with Alan Krueger) has shown that after labor disputes that go badly for workers, the quality of work declines. See Mas (2004) on the value of construction equipment after a dispute, Mas and Krueger (2004) on defects in tires after a strike, and Mas (2006) on police work after arbitration. One other example of mainstream economists doing research with a behavioral economics bent would be Edward Glaeser (2013) on speculation in real estate.
358 improve our understanding of public policy: See Chetty’s (2015) Ely lecture delivered at the American Economic Association Meeting that I organized in January 2015. In this case you can literally see it by going to the AEA website: https://www.aeaweb.org/webcasts/2015/Ely.php.
BIBLIOGRAPHY
Agarwal, Sumit, Mi Diao, Jessica Pan, and Tien Foo Sing. 2014.

My objective is to explain what my colleagues and I learned along the way, so that you can use those insights yourself to improve your understanding of your fellow Humans. But there may also be useful lessons about how to try to change the way people think about things, especially when they have a lot invested in maintaining the status quo. Later, we turn to more recent research endeavors, from the behavior of New York City taxi drivers, to the drafting of players into the National Football League, to the behavior of participants on high-stakes game shows. At the end we arrive in London, at Number 10 Downing Street, where a new set of exciting challenges and opportunities is emerging.
My only advice for reading the book is stop reading when it is no longer fun. To do otherwise, well, that would be just misbehaving.
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* One economist who did warn us about the alarming rate of increase in housing prices was my fellow behavioral economist Robert Shiller.
2
The Endowment Effect
I began to have deviant thoughts about economic theory while I was a graduate student in the economics department at the University of Rochester, located in upstate New York.

., Sources of Chinese Tradition: From 1600 Through the Twentieth Century, vol. 2, 507-510.
8 The key events in computer technology were the introduction of the first standardized IBM personal computers and Intel microprocessors in 1983, the addition of a Graphical User Interface (GUI) to the Apple Macintosh in 1984, the Windows GUI by Microsoft in 1986, and the release in 1990 of Windows 3.0, a much improved GUI developed for the IBM 386 computer.
9 See, for example, Edward Glaeser and Janet Kohlhase, “Cities, Regions and the Decline of Transport Costs,” and Nils-Gustav Lundgren, “Bulk Trade and Maritime Transport Costs: The Evolution of Global Markets,” Resources Policy 22:1-2 (March-June 1996): 5-32.
10 Jeffrey Frankel, “The Japanese Cost of Finance: A Survey,” Financial Management 20:1 (Spring 1991).
Chapter Five
1 Quoted in New York Times, October 8, 2006.
2 John Naisbitt, Megatrends.
3 Toffler elaborated and popularized the idea of a post-industrial society.

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As Smith said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.”3
The miraculous efficiency of the market system, taken for granted everywhere today, was far from obvious to half of humanity just a few decades ago, as illustrated by the famous, though probably apocryphal, anecdote about Nikita Khrushchev’s first trip to the United States. The Soviet leader, after visiting some supermarkets in Manhattan and finding them filled with fresh food, in contrast to the empty shelves of Moscow, turned to his host, Vice President Richard Nixon, and asked, “Who is responsible for the supply of bread to New York City? I want to meet this organizational genius.” In The Company of Strangers, a brilliant book about the roots of economic cooperation in the biology of human evolution, the Anglo-French economist Paul Seabright delightfully describes the wonder that market forces ought to inspire:
This morning I went out and bought a shirt. There is nothing very unusual about that; perhaps twenty million people did the same.

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Until the 1930s, almost no one, especially those in the nerve center of the global economy that was nineteenth-century Britain, believed that politicians could or should do anything to improve or stabilize the workings of the market. The cycles of finance and economic activity were treated as forces of nature, which politicians could no more moderate than they could influence the tides. Even the interventions of the Bank of England to quell panics in the money markets were seen mainly as private matters, motivated by the self-interests of the City of London and British finance, rather than a core responsibility of the state.16 Prime Minister Gordon Brown has described in several speeches a document in the Treasury archives that shows the government’s reaction to Keynes’s early proposal to lift the British economy out of the Great Depression. His advocacy of what would now be described as demand management was dismissed by the permanent secretary of the Treasury in three scribbled words: Extravagance, Inflation, Bankruptcy.17
The view that government had no responsibility for macroeconomic conditions such as unemployment changed gradually after the First World War and was transformed by the collapse of global trade and industry in the early 1930s.

See also the extremely compelling account by Jack Beatty in Age of Betrayal (New York: Vintage, 2007).
5. Pestritto and Atto, American Progressivism, 215, quoting Roosevelt’s “The New Nationalism,” Oct. 1910.
6. McCormick, “The Discovery that Business Corrupts Politics,” 247, 265.
7. Speech of Theodore Roosevelt, April 14, 1906, available at link #2.
8. John Joseph Wallis, “The Concept of Systematic Corruption in American History,” in Edward Glaeser and Claudia Goldin, eds., Corruption and Reform (Chicago: University of Chicago Press, 2006), 21 and 23, available at link #3.
Professor Michael Johnston is the dean of corruption studies. His Syndromes of Corruption (2005) captures better the dynamic of corruption that I am describing. While his work is comparative, and addresses the full range of corruption, including quid pro quo corruption, the mechanism he describes in a number of nations is close to the conception of “dependence corruption” described later.

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Yet everyone within such an economy is monitoring the gifts given and the gifts in return. And anytime a significant gap develops, the relationship evinced by the gifts gets strained.
Against this background, we can understand Washington a bit better.
In the days of wine, women, and wealth, Washington may well have been an exchange economy. I doubt it, but it’s possible. Whatever it was, however, it has become a gift economy.59 For as the city has professionalized, as reformers have controlled graft more effectively and forced “contributions” into the open, the economy of D.C. has changed. If the law forbade D.C. from being an exchange economy, it could not block its becoming a gift economy. So long as the links are not expressed, so long as the obligations are not liquidated, so long as the timing is not too transparent, Washington can live a life of exchanges that oblige without living a life that violates Title 18 of the U.S.

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And as the lobbying industry grows, D.C. gets rich, too. Nine of Washington’s suburban counties are now listed by the Census Bureau as among the nation’s twenty with the highest per capita income.90 As former labor secretary Robert Reich describes,
When I first went to Washington in 1975, many of the restaurants along Pennsylvania Avenue featured linoleum floors and an abundance of cockroaches. But since then the city has become an increasingly dazzling place. Today, almost everywhere you look in downtown Washington you find polished facades, fancy restaurants, and trendy bistros. There are office complexes of glass, chrome and polished wood; well appointed condos with doormen who know the names and needs of each inhabitant; hotels with marble-floored lobbies, thick rugs, soft music, granite counters; restaurants with linen napkins, leather-bound menus, heavy silverware.91
There are many in the lobbying profession, of course, who deplore the state of the industry.

Richard H. Thaler, Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (New Haven: Yale University Press, 2008).
16. Cass R. Sunstein, ed., Behavioral Law and Economics (Cambridge and New York: Cambridge University Press, 2000).
17. Aditya Chakrabortty, “From Obama to Cameron, why do so many politicians want a piece of Richard Thaler?” Guardian, July 12, 2008, 16.
18. Edward Glaeser, “Paternalism and Psychology,” University of Chicago Law Review (2006): 133–56.
19. Told to me by William Sharpe.
20. The first criticism is in Paul Zarowin, “Does the Stock Market React to Corporate Earnings Information?” Journal of Finance (1989): 1385–99, the second in K. C. Chan and Nai-fu Chen, “Structural and Return Characteristics of Small and Large Firms,” Journal of Finance (1991): 1467–82.
21.

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Just after World War I, a conservative AT&T statistician and a socialist economist approached Mitchell with a proposal to settle some of their arguments over economic policy by improving the quality of economic statistics.10 The result was the National Bureau of Economic Research, which opened its doors in New York in 1920 and went on to revolutionize the collection, dissemination, and understanding of economic data in the United States. Gross national product was one of the many measurement innovations it spawned.
Mitchell exerted a powerful attraction on younger economists. He was a New York City progressive intellectual of the first order, living in a Greenwich Village townhouse, married to a famed proponent of educational experimentation (Lucy Sprague Mitchell, founder of the Bank Street College of Education), and himself a cofounder of the New School for Social Research. When young Austrian Friedrich Hayek arrived in the United States for the first time in 1923, he was shocked to discover that his American peers no longer cared about Fisher or any of the country’s other neoclassical greats.

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He just claimed not to find it interesting. It was “particularly unfortunate,” Prais concluded, that Kendall had chosen such markets to investigate rather than something more significant. (Years later, Prais still complained that Kendall’s paper “seems to have become more important than it should be.”)
This was the postwar British mindset. Government controlled the commanding heights of the economy, and the markets of London’s City simply didn’t seem all that important. Just as Oxford’s A. D. Roy failed to pursue the portfolio selection theory he unveiled the same year, Kendall soon dropped the subject. If the beguiling idea of a “demon of chance” at work in the market were to resonate, it would have to do so where financial markets mattered—in the United States.
Like Prais and Houthakker, Paul Samuelson could immediately see the link between randomness and a well-functioning financial market, but unlike them he cared enough about investing to find it interesting.

The Audit on Ground Zero Coverage, Raab, Longobardi Trade Shots on Silverstein, Rubenstein, the Port Authority and Lack of Progress,” Columbia Journalism Review, November 19, 2007.
26 Hugh F. Kelly, “The New York Regional and Downtown Office Market: History and Prospects after 9/11,” report prepared for the Civic Alliance, Economic Development Working Group, August 9, 2002, 5. Also see Franz Fuerst, “The Impact of 9/11 on the Manhattan Office Market,” in Resilient City: The Economic Impact of 9/11, ed. Howard Chernick (New York: Russell Sage Foundation, 2005), 62–96.
27 Kelly, “The New York Regional and Downtown Office Market,” 69.
28 Edward L. Glaeser and Jesse L. Shapiro, “Cities and Warfare: The Impact of Terrorism on Urban Form,” Journal of Urban Economics 51 (2002): 205–224, at 222. The policy stimulus behind the steady conversion of buildings to residential use, the so-called 421-g tax incentive program of real estate tax exemptions and abatement, in effect from 1995 to 2006, spurred more than 15 million square feet of conversions, producing 8,225 apartments (rental and condominium units) by the end of 2006.

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The optimistic view of downtown’s future was not uniformly shared among economists who considered the impact of 9/11 on the Manhattan office market and the city’s economy. In fact, there was no clear consensus on the full longer-term impact of the terrorist attacks; it was still too early for most who analyzed the data to draw definitive conclusions. Some found reason for optimism in the behavior of firms dislocated from downtown: 80 percent chose to settle in the core markets of downtown or midtown Manhattan (Franz Fuerst). Others found reasons for optimism in the lack of any clear signs of lasting economic damage to Manhattan’s strong historic draw as a prime office location (Jason Bram, Andrew Haughwout, and James Orr). Still others saw no viable economic future for the downtown office district.
Writing in 2002, Harvard economists Edward L. Glaeser and Jesse L. Shapiro considered Manhattan’s downtown financial district, even before 9/11, as an “anachronism,” artificially “propped up by government subsidies, most spectacularly in the building of the World Trade Center itself.”

In 1656 he was excommunicated by his Jewish community, who, with memories of the Inquisition still fresh, were nervous about making waves among the surrounding Christians.145 It was no tragedy for Spinoza, as it might have been if he had lived in an isolated village, because he just picked up and moved to a new neighborhood and from there to another tolerant Dutch city, Leiden. In both places he was welcomed into the community of writers, thinkers, and artists. John Locke used Amsterdam as a safe haven in 1683 after he had been suspected of taking part in a plot against King Charles II in England. René Descartes also changed addresses frequently, bouncing around Holland and Sweden whenever things got too hot.
The economist Edward Glaeser has credited the rise of cities with the emergence of liberal democracy.146 Oppressive autocrats can remain in power even when their citizens despise them because of a conundrum that economists call the social dilemma or free-rider problem.

The sizes of towns and cities is a good example. It’s hard to answer the question “How big is a typical American municipality?” New York has 8 million people; the smallest municipality that counts as a “town,” according to Guinness, is Duffield, Virginia, with only 52. The ratio of the largest municipality to the smallest is 150,000, which is very different from the less-than-fivefold variation in the heights of men.
Also, the distribution of sizes of municipalities isn’t curved like a bell. As the black line in figure 5–10 shows, it is L-shaped, with a tall spine on the left and a long tail on the right. In this graph, city populations are laid out along a conventional linear scale on the black horizontal axis: cities of 100,000, cities of 200,000, and so on. So are the proportions of cities of each population size on the black vertical axis: three-thousandths (3/1000, or 0.003) of a percent of American municipalities have a population of exactly 20,000, two thousandths of a percent have a population of 30,000, one thousandth of a percent have a population of 40,000, and so on, with smaller and smaller proportions having larger and larger populations.59 Now the gray axes at the top and the right of the graph stretch out these same numbers on a logarithmic scale, in which orders of magnitude (the number of zeroes) are evenly spaced, rather than the values themselves.

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The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century
by
Walter Scheidel

Their educational attainment is and will continue to be much lower than for European nationals, and employment rates are low in a number of countries, especially for women. The persistence or worsening of these problems may produce disequalizing consequences for the societies in question. Moreover, the growth of communities of first-generation immigrants and those of recent foreign-origin family background has the potential to affect attitudes and policies regarding social welfare and redistributive spending. Alberto Alesina and Edward Glaeser have argued that welfare policies are correlated with ethnic homogeneity, which helps explain why the United States developed a weaker welfare state than European countries. They anticipate that growing immigration will undermine the generosity of European welfare states and that anti-immigrant sentiment may be used to dismantle redistributive policies and “eventually push the continent toward more American levels of redistribution.”

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The consequences of collapse differed greatly from those of conquest that preserved the scale and characteristics of earlier state structures: whereas the Norman conquest of England preserved or even briefly increased wealth inequality, the fragmentation of a previously very large sphere that had been exploited by a small central ruling class had very much the opposite effect.15
”MANY OF THE TOWNS OF THAT PERIOD DO NOT SEEM TO US TODAY TO BE PARTICULARLY IMPOSING”: SYSTEMS COLLAPSE IN THE LATE BRONZE AGE MEDITERRANEAN AND THE PRE-COLUMBIAN AMERICAS
By the thirteenth century BCE, the eastern Mediterranean had turned into a system of powerful states interconnected by diplomacy, war, and trade: Ramesside Egypt and the Hittite empire in Anatolia were vying for supremacy, the Middle Assyrian empire expanded in Mesopotamia, city-states flourished in the Levant, and the Aegean was dominated by large palaces that managed economic production and distribution. Nobody would have predicted the rapid collapse of this state system in the decades after 1200 BCE. All over the region cities suffered damage or wholesale destruction—in Greece, Anatolia, Syria, and Palestine. Just after 1200 BCE, the Hittite empire failed, and its capital city Hattuša was partly destroyed and abandoned. The important city of Ugarit on the Syrian coast was wiped out a few years later, as were other sites farther inland. Cities such as Megiddo (in the plain of the biblical “Armageddon”) followed suit. In Greece, the mighty palaces were destroyed one by one.

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Indeed, the closer they came to this outcome, as the Flemish peasant movement of the 1320s may arguably have done, the stronger the countervailing forces they were bound to unleash.28
”LONG LIVE THE PEOPLE AND DEATH TO THE WOLVES”: REVOLT IN CITIES AND CITY-STATES
What was true of rural revolts applied even more to urban risings. In most historical settings, cities were embedded in vast rural landscapes, their populations greatly outnumbered by the peasantry. Rulers and nobles could draw on soldiers, arms, and resources from surrounding areas to bring rebellious towns to heel. The bloody crushing of the Paris commune in 1871 is merely one relatively recent example. If urban revolts had any prospect of success, it would have been in self-governing city-states whose local elites could not readily fall back on external resources of repression.
In chapter 6, ancient Greece served as an early example of military mass mobilization and concurrent egalitarianism.

The tepid response of the profession is documented in Cooke and Flitter, “Economists Display Little Interest in Ethics Code.” I leave it to some future historian to document the deliberations of the Ad Hoc Committee headed by Robert Solow, first convened in January 2011. Instead of carrying out its deliberations in public, as per normal, the AEA committee discussions were themselves secret.
140 Edward Glaeser, “Where to Draw a Line on Ethics,” Economix blog, April 1, 2011, at http://economix.blogs.nytimes.com/2011/01/04/where-to-draw-a-line-on-ethics/. This confession of administrative responsibility for neutralizing conflict-of-interest policies is another example of how neoliberal economists actively push universities such as Harvard in a more neoliberal direction.
141 For the text, see www.aeaweb.org/aea_journals/AEA_Disclosure_Policy.pdf.
142 Davies and McGoey, “Rationalities of Ignorance,” p. 77.
143 Posner, Public Intellectuals.
144 Proctor and Scheibinger, Agnotology.

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Leon Festinger and his colleagues illustrated these lessons in his first book (When Prophecy Fails) by reporting the vicissitudes of a group of Midwesterners they called “The Seekers,” who conceived and developed a belief that they would be rescued by flying saucers on a specific date in 1954, prior to a great flood coming to engulf Lake City (a pseudonym). Festinger documents in great detail the hour-by-hour reactions of the Seekers as the date of their rescue came and passed with no spaceships arriving and no flood welling up to swallow Lake City. At first, the Seekers withdrew from representatives of the press seeking to upbraid them for their failed prophecies, but soon reversed their stance, welcoming all opportunities to expound and elaborate upon their (revised and expanded) faith. A minority of their group did fall away; but Festinger notes they had tended to be lukewarm peripheral members of the group before the crisis.

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It is all the more poignant when administered through an absentminded procedure. One index is the willful catch-22 character of the official determinations tendered along with the torment:
In Colorado, Grand Junction’s city council is considering a ban on begging; Tempe, Arizona, carried out a four-day crackdown on the indigent at the end of June. And how do you know when someone is indigent? As a Las Vegas statute puts it, “an indigent person is a person whom a reasonable ordinary person would believe to be entitled to apply for or receive” public assistance. One person who fits that description is Al Szekeley. A grizzled sixty-two-year-old, he inhabits a wheelchair and is often found on G Street in Washington, D.C.—the city that is ultimately responsible for the bullet he took in the spine in Phu Bai, Vietnam, in 1972. He had been enjoying the luxury of an indoor bed until December 2008, when the police swept through the shelter in the middle of the night looking for men with outstanding warrants.

Patent laws have expanded too far by protecting software and business methods.15
Morris Kleiner has calculated that the percentage of jobs subject to occupational licensing has expanded from 10 percent in 1970 to 30 percent in 2008.16 Licensing reduces opportunities for employment, limits the ability of new entrants to create small businesses, and restricts upward mobility for lower-income individuals. By contributing to a reduction in the rate of entry of new firms, licensing is one of the sources of the decline in “business dynamism” noted in the literature cited in chapter 17. Edward Glaeser has called restrictive zoning and land use regulations a “regulatory tax” that transfers wealth from the less affluent to more affluent and promotes housing segregation by keeping poor people away from rich people and that, by inflating housing prices, encourages potential residents to move away from the most productive metropolitan areas to less productive areas, where housing is cheaper.17 All these instances of excessive regulation are relevant to inequality, for they redistribute income and wealth to those who are protected by their copyrights, patents, licenses, and land-use restrictions.

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Spurred on by growing family sizes during the baby boom, middle-class parents fled the central city, leaving central cities in which residential segregation in some cities isolated the African American population in what became known as urban ghettoes.
The distinction between the city and the suburb can be overdone. Adjectives to describe each exaggerate the differences. Cities can be described as bad (dangerous, polluted, concrete) or good (diverse, dense, stimulating), and so can suburbs (homogeneous, sprawling, and dull vs. safe, healthy, and green).54 In fact, many areas within the city limits closely resemble suburbs, such as Chicago’s bungalow belt, built largely in the 1920s. Within New York City, most of the dwelling units of Queens and Staten Island have front and back yards. Many American cities grew by annexation of surrounding suburbs and even whole counties, and most of cities such as Minneapolis, Houston, Phoenix, and Los Angeles are largely suburban in character.

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The impression which this comfort and plenty makes is heightened by the brilliance and keenness of the air, by the look of freshness and cleanness which even the cities wear. The fog and soot-flakes of an English town, as well as its squalor, are wanting; you are in a new world, and a world which knows the sun.27
Bryce was viewing the American city of the mid-1880s in contrast with crowded and sooty English cities of the same era. Others noted the lower density of American cities than in Europe. Adna Weber in 1899 calculated that the population density of fifteen American cities was twenty-two persons per acre as compared to 158 for thirteen German cities.
Gradually, between 1840 and 1870, the suburban ideal became based on the virtues of separation rather than physical connections between adjacent dwellings. “The lawn was a barrier—a kind of verdant moat separating the household from the threats and temptations of the city.”28 As the outskirts of cities were developed after 1870, property covenants often required that houses be set back a certain distance from the street and sidewalk.